The visitors enjoyed marginally the better of the opening period, but fell behind on the hour mark when on-loan centre-half Marcel Seip met David Vaughan's corner to score for the second successive game.
Jason Euell made it 2-0 nine minutes later following a flowing move from the hosts, before substitute Charlie Adam added a third goal with a drilled effort from the edge of the area.
Blackpool stay in the play-off places following the victory and remain unbeaten at home this season, while United have now gone five league games without a win.
Holloway opted to make seven changes to the side that recorded a 2-0 home victory over Plymouth at the weekend, with Gary Taylor-Fletcher making a surprise return from an ankle injury.
On-loan forward Richard Cresswell was recalled to the Sheffield United line-up, with Ched Evans dropping to the bench.
David Cotterill, Ryan France and Andy Taylor also returned for the Blades after missing Saturday's disappointing 3-1 defeat at Scunthorpe.
The visitors were the first to threaten in the sixth minute, although Seasiders goalkeeper Matthew Gilks was equal to Darius Henderson's firmly-struck shot from 20 yards.
Blackpool had a decent opportunity of their own nine minutes later when Neal Eardley's cross picked out Euell, but the veteran striker diverted his header wide.
Gilks was called on to parry away another left-footed effort from Henderson soon after, while at the other end Euell was off target with a header from Jay Emmanuel-Thomas' cross.
United wasted a golden opportunity to take the lead 11 minutes before the break. Stephen Quinn's corner picked out Matt Kilgallon in the area and the centre-half headed over when it seemed easier to score.
Henderson was denied by Gilks for a third time as the Blades finished the half strongly and the Blackpool stopper also had to be alert to keep out a long-range effort from James Harper.
Holloway made two changes to his Blackpool side at the break, with Adam and David Vaughan coming on in place of Taylor-Fletcher and Al Bangura.
Alex Baptiste headed straight at Mark Bunn from an Adam free-kick in the 50th minute, but United went close again five minutes later through Taylor, who saw his 20-yard strike pouched by Gilks.
Baptiste then directed a header over the bar from Vaughan's outswinging corner.
And another Blackpool set-piece provided the game's opening goal on the hour mark as Seip escaped the attentions of Kilgallon to head home Vaughan's flag-kick.
Brett Ormerod and Eardley both spurned chances to extend their side's lead as the hosts enjoyed their best spell of the match.
And the Seasiders were soon rewarded with a second goal as a flowing move ended with the overlapping Eardley crossing for Euell to sidefoot home from 12 yards.
The hugely impressive Adam then saw an audacious long-range lob tipped over by a back-pedalling Bunn.
However, the former Rangers man was not to be denied a goal and he poured salt into United's wounds by firing home from 20 yards with eight minutes remaining.