The Eagles, who lost 4-1 at home to Fulham on Monday, are second-bottom on the table, with seven defeats from eight games.
Holloway said: "This club needs an impetus of energy. But I just feel tired to be honest. I'm worn out.
"I want to give them the chance to stay in this division.
"They didn't want me to do this. They've got a great chance, they've got 30 more games. The best chance they've got is if they use some of the money this big division gives them to get someone they couldn't afford when they chose me, and if that happens, sitting at home in my front room, no one is going to jump higher than me."
Palace co-chairman Steve Parish added: "He felt things weren't working for him, he felt that he wasn't getting the support that he wanted to get and a different approach might keep us in the division."
Holloway joined the club last November and led the side to promotion via the play-offs.