"You can never write Munster off," he said. "They have laid the foundations in place and, after all the time of trying, there is a legacy there now.
"They have worked hard to get where they are now - just ask our forwards coach Jonathan Humphreys because when he played Munster at the end of his career he was playing in front of just a couple of hundred people at Thomond Park.
"Now they have big stands, have won a couple of Heineken Cups, have won the Magners and are currently top of the Magners and our Heineken Cup group.
"It is ludicrous that people wrote them off at the start of the season - and those comments and thoughts have probably spurred them on.
"We didn't really need that but we are improving and progressing and it should be a great couple of weeks.
"Munster have huge support, win, lose or draw. It does provide a cauldron but we have learnt to use that to our advantage. The players are used to playing in front of big crowds and in big games and we just have to get on with it."
The Ospreys lost on the road at Toulon when they seemed to have an invaluable away win in their sights and Holley believes they will not let any similar chance slip through their hands.
"If we find ourselves in the same position as in Toulon - we were in a strong position for 75 minutes but it shows the strength of the sides in this group - I hope we can see the game out," he said.
"I believe we have seen evidence of that and these games are so tight and high-pressured that experience counts for a lot.
"People like Ronan O'Gara and Jonny Wilkinson come to play but Dan Biggar is learning that. He did well in the Grand Final and has the experience of Biarritz away last season. Our players need to learn from that and start nailing these tight games.
"Dan is competitive and will have a point to prove after the autumn internationals. Dan is a good player and a future Wales No 10. He will go out and do his job.
"The Heineken Cup is hugely important for us. But if you want to progress then you have to go to champion places like Munster and do well. It's not on just this game but the double-header will be important.
"We have been knocking on the door for a while but that can be frustrating because you can get impatient. You do need a touch of luck and while we haven't had that with the draw we have to overcome that."