Holland was mostly recorded in Baambrugge, Netherlands over the summer of 1972 using a reconstructed studio sent from California, and with two Brian Wilson tracks rush-recorded in Los Angeles and added to the album at the last minute. The photograph on the album's front cover is an upside down image of the Kromme Waal, a canal that runs through the center of Amsterdam.
To record the album, the band members and their families moved to Baambrugge, in the Netherlands, in an attempt to focus their efforts in recording a new studio album. Vocalist and guitarist Al Jardine later commented: "It was rough being in Holland. We were working 24/7 in a small homemade rebuilt piecemeal little studio in a garage next to a cow pasture. Yeah, it was rough. We didn’t even have the correct electricity [...] so that kind of affected the sound of our equipment. It was a mixed blessing."
Holland's bonus EP, entitled Mount Vernon and Fairway (A Fairy Tale), was based on the intersection where Mike Love's family had lived in the View Park district of Los Angeles, and was primarily composed by Brian Wilson. Wilson originally intended it to be the centerpiece of a new Beach Boys album, consisting of the tracks from the EP and "Funky Pretty". Wilson has said that he listened to Randy Newman's 1972 album Sail Away "over and over" while physically writing down the lyrics that became the Mount Vernon and Fairway suite.
Critic Robert Christgau praised the sound quality of Holland, but believed that the album had strayed too far from what the Beach Boys did best. He said: "I suppose that in time their tongue-tied travelogue of Big Sur may seem no more escapist than 'Fun Fun Fun,' but who'll ever believe it's equally simple, direct, or innocent?"
In 2000, Elvis Costello ranked the album as one of his favorite records of all time.Camper Van Beethoven have said that when recording their album La Costa Perdida, Holland was an enormous inspiration to them.