Arsenal will be the opponents on Saturday as Palace play for the first time since Holloway left his role as manager by mutual consent - just nine games after leading the club to promotion.
And Wenger was quick to herald Holloway's achievements in just under a year in south London.
He said: "I think it is very harsh on Ian Holloway because he has done exceptionally well with Crystal Palace to get them up to the Premier League.
"It is very difficult to do that. I think it is very early to separate with Ian Holloway because I think he has exceptional talent to manage a football team.
"He is a football man. He has something that belongs to him that is special. You feel there is something in there that can take people on board with him.
"When you want to win with a passion, defeat can drain you down and that can happen to anybody. When you are a bit older you can maybe deal with it a little bit better but what is killing in our job is to lose a succession of games."
Wenger himself experienced defeat in midweek, Borussia Dortmund's 2-1 win in north London ending Arsenal's 12-match unbeaten run.
But there are no concerns that setback could send his side into the kind of slump they suffered last autumn, when they won just once in six Premier League and European games.
He said: "We want to respond quickly. We have faced that already in our season. I'm confident in the capacity of my team to respond quickly and in a positive way.
"On Tuesday I felt we were the victim of perhaps wanting too much just to win the game and the heart took over the head and we opened ourselves up to losing a game. A draw would have been a fair result."