Seam-bowling all-rounder Hollioake, 35, formerly with Surrey, will play for the Essex Eagles during the 20-over competition starting Friday. However, his contract extends solely for the duration of the tournament.
Australia-born Hollioake, who captained Surrey, has been based in Perth since his retirement from county cricket three years ago.
"I've signed for Essex's Twenty20 Cup participation and I won't be playing beyond that," Hollioake told the BBC.
"This fits in nicely because, with my business commitments, it's impossible to commit to the training required to play all year round."
Hollioake, who runs a property development business in Australia, will make his Essex Eagles debut in their Twenty20 opener against Sussex Sharks on Friday.
"With the Twenty20 Cup schedule fitting into the school holidays and this being the best time of year in England, this was an offer too good to refuse," he added.
"I love playing Twenty20 cricket and I'm now looking forward to getting the red gear on and seeing how I'll do."
Hollioake led Surrey to three County Championship titles in five years, as well as the National League (40-over) title and inaugural Twenty20 Cup in 2003.
He also played four Tests and 35 one-day internationals, leading England to the 1997 Champions Trophy title in Sharjah.