Holmium oxide is one of the colorants used for cubic zirconia and glass, providing yellow or red coloring.Glass containing holmium oxide and holmium oxide solutions (usually in perchloric acid) have sharp optical absorption peaks in the spectral range 200-900 nm. They are therefore used as a calibration standard for optical spectrophotometers and are available commercially.As most other oxides of rare-earth elements, holmium oxide is used as a specialty catalyst, phosphor and a laser material. Holmium laser operates at wavelength of about 2.08 micrometres, either in pulsed or continuous regime. This laser is eye safe and is used in medicine, LIDARs, wind velocity measurements and atmosphere monitoring.

Holmium oxide has some fairly dramatic color changes depending on the lighting conditions. In daylight, it is a tannish yellow color. Under trichromatic light, it is a fiery orange red, almost indistinguishable from the way erbium oxide looks under this same lighting. This is related to the sharp emission bands of the phosphors.

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