Norwich had raced into a 3-1 lead at the Madejski Stadium, but the game turned in Reading's favour when Holt was given his marching orders.
Referee Michael Oliver showed the Norwich captain a straight red card following a challenge on Ian Harte, a decision labelled "ludicrous" by Norwich manager Paul Lambert.
But the FA review panel has rescinded the red card and Holt is available for the games against Leeds, local rivals Ipswich and Derby.