Holzer was born in Vienna, Austria. His interest in the supernatural was sparked at a young age by stories told to him by his uncle Henry. He went on to study archaeology and ancient history at the University of Vienna but seeing that war was imminent, his family decided it was unsafe to stay in Austria and left the country for New York City in 1938. He studied Japanese at Columbia University and, after studying comparative religion and parapsychology, claimed to have obtained a Ph.D. at a school called the London College of Applied Science. He went on to teach parapsychology at the New York Institute of Technology. Holzer wrote more than 120 books on ghosts and the afterlife.
His extensive involvement in researching the supernatural included investigating The Amityville Horror and some of the most prominent haunted locations around the world. He also worked with well-known trance mediums such as Ethel Johnson-Meyers, Sybil Leek, and Marisa Anderson. Holzer has been credited with creating the term "The Other Side" (already in use, however, in nineteenth-century spiritualism) or in full "The Other Side of Life". He is also sometimes credited with having coined the term ghost hunter, which was the title of his first book on the paranormal published in 1963. However, an earlier book by Harry Price published in 1936 was titled Confessions of a Ghost Hunter.
In 1970, Holzer published a study of spirit photography called Psychic Photography: Threshold of a New Science?. The book included photographs taken by the spirit photographer John Myers.
Holzer believed in life after death and the existence of ghosts, spirits, and "stay behinds". Ghosts were, according to him, imprints left in the environment which could be "picked up" by sensitive people. Spirits were intelligent beings who could interact with the living, while "stay behinds" were those who found themselves earth-bound after death. He also believed in reincarnation and the existence of "levels of consciousness".
Holzer was a proponent of psychic archaeology, which has been widely criticized as pseudoscience.
Holzer was mentioned in Nathan Fielder's television show, Nathan for You. A Psychic in the show claimed his mother was deemed the 'Queen of the Psychics' by Holzer himself.
Holzer's most famous investigation was into The Amityville Horror case. In January 1977, Holzer and spiritual medium Ethel Meyers entered 112 Ocean Avenue in Amityville, New York. Meyers claimed that the house had been built over an ancient Native American burial ground and the angry spirit of a Shinnecock Indian Chief - "Rolling Thunder" - had possessed the previous occupant, Ronald Defeo Jr., driving him to murder his family. Photographs taken at the scene revealed curious anomalies such as the halos which appeared in the supposed images of bullet marks made in the original 1974 murders. Holzer's claim that the house was built on Indian sacred land was, however, denied by the local Amityville Historical Society and it was pointed out that it was the Montaukett Indians, and not the Shinnecocks, who had been the original settlers in the area. However, Indian burial sites have been found all over Long Island, including Amityville, so no one has been able to confirm or deny the burial of an Indian chief on or near the 108 Ocean Avenue property. Holzer went on to write several books about the subject, both fiction and non-fiction.
Holzer's endorsement of psychics in ghost hunting was criticized in an article for the Journal for the Society for Psychical Research which "cast considerable doubt on the objectivity and reliability of his work as a whole."
Skeptical investigator Joe Nickell has written that Holzer did not provide verification for some of his claims and he credulously accepted spirit photographs, anecdotal reports, and other doubtful evidence.
Nickell also wrote that the mediums Holzer endorsed Ethel Meyers and Sybil Leek offered "unsubstantiated, even unverifiable claims, or information that can be gleaned from research sources or from knowledgeable persons by “cold reading” (an artful method of fishing for information)."
Fellow ghost hunter Peter Underwood wrote an obituary for Holzer in The Guardian, in which he disputed Holzer's claim (made in his 1979 book Murder in Amityville) that the house on Ocean Avenue in Amityville was built on the site of a Shinnecock burial ground.
Holzer's daughter, Alexandra Holzer, wrote a 2008 book titled Growing Up Haunted, based on her life with her father and his paranormal quest. The book was optioned by Vance Entertainment to be developed as a potential feature film.