Caulker gave an interview to The Guardian in June in which he disclosed his own battle against mental illness and addiction, revealing he contemplated committing suicide while wrestling with his demons.
The 25-year-old, who has an England cap and goal to his credit, has not played for Rangers since October, although Holloway is ecstatic that a player of Caulker's calibre is now working under him again.
"I am delighted to have him back," Holloway said at a press conference on Monday.
"That is a potential England centre-half again.
"Obviously it's not ideal for me because he's only just been training with me. It's been pretty well documented. His article in the newspaper was as open as I've ever seen any footballer.
"Part of me was really sad about that, part of me was pleased and proud of him to actually admit that and now he's in a fantastic place. He wants to come back and he wants to work and I can't believe I'm the lucky person who's going to work with him.
"The lads feel the same way. For me, now, it's about helping him, with how up front and honest he's been, to keep playing, keep working and keep improving. I'm delighted to have him."