The 22-year-old’s transfer will be formally activated when the January window reopens on New Year's Day.
He won't be available for tomorrow's clash with Blackburn Rovers, but is expected to make his debut in the FA Cup third round match at home to Wigan Athletic on Saturday.
Holgate opted to join Albion on loan over Championship leaders Leeds United and Premier League outfit Bournemouth.
Head coach Darren Moore tried to sign him in the summer after being impressed with a performance at The Hawthorns last season.
Moore said: “I tried to bring Mason into the squad in the summer but at that stage Everton were not willing to release him.
“I watched him play against Salomon Rondon in the goalless draw at The Hawthorns last season and I thought he was outstanding.
"I want to get our business done as early as possible and this is a good start – I’m grateful to get him into the squad now."
Holgate will provide competition at both right-back and centre-back, where the Baggies need reinforcements.
"First and foremost he is a good, good player," said Moore. "He is quick, agile, athletic, comfortable on the ball.
"He’s a young, up-and-coming player with a big future. But he already has good Premier League experience including playing in a Merseyside derby and that is a real furnace to handle.
“He will compete for the right-back and central defensive positions. His enthusiasm to come also impressed me – he wants to play and I believe he is going to be a good addition for us."
Holgate is Albion's fourth loan signing of the season, following Dwight Gayle, Harvey Barnes, and Tosin Adarabioyo.
Clubs in the Championship can have eight loanees in total, but can only name five in any matchday squad.
Holgate said both Moore and assistant head coach Graeme Jones convinced him to come to The Hawthorns.
“They seem to be on TV every week so it’s not been difficult to see them play,” he said. “I’m joining a good team and I know everyone’s aim here is promotion.
“They have been playing good football in a tough league and I can’t wait to get involved.
“Speaking to the gaffer, this was the right move for me. I also had a year working with ‘Bonner’ (Jones) at Everton and it will be good to work with him again as well.”
Holgate came through at Barnsley as a centre-back, but he's played most of his football at Everton at right-back.
“I feel comfortable in both," he said. "I have made more than 40 first-team appearances at Everton but this season has been frustrating for me.
"Like all footballers, I just want to get out on the pitch and play and I’m really looking forward to this spell with Albion.”