The 37-year-old had been holding out hope that he would be able to play again. Last month, he described a deteriorating condition that included nerve pain in his legs and disk-related issues.
Holland said Zetterberg will be placed on long-term injured reserve.
Zetterberg had played in all 82 games over each of the past three seasons. He had 11 goals and 45 assists in 2017-18 as the Red Wings missed the playoffs for the second straight year.
The two-time All-Star took home the Conn Smythe Trophy in 2008 as Detroit won the Stanley Cup. In 2015, he was honored with the King Clancy Memorial Trophy, which recognizes a player’s leadership and humanitarian efforts.