The 19-year-old, who has made 14 first-team appearances for the Terriers, will stay with the Glovers until March 23, but his parent club have a recall clause after 28 days.
Holmes is expected to be available for Yeovil's home league game against Doncaster on Saturday.
Yeovil manager Gary Johnson told the club's official website: "I am very pleased to add a quality player like Duane to our squad. He will bring something different to our game and I know our fans will enjoy watching him in a Yeovil Town shirt."
Holmes progressed through Town's academy and made his first-team debut in the Capital One Cup at Hull in September.
Huddersfield manager Mark Robins told his club's official website: "I've been keen to keep Duane in and around our squad because he's made an impact this season.
"But in terms of taking the next step in his development, this move to gain further experience in the Championship is a very good one for him and of course for us.
"I've spoken with Gary Johnson and he assures me that he will be given a good opportunity and we are looking forward to him taking the chance to get time on the pitch.
"Yeovil are desperately trying to get out of the bottom three and the experience will do him good.
"We hope that during his loan with them he progresses and gains more Championship experience, enabling him to come back here with more knowledge on what is required at this level."