Hollands has been on the sidelines and was admitted to hospital following his erratic behaviour in the April 16 match against Collingwood.
The fine will be paid to the AFL's mental health partner, Headspace. The league will implement several changes around mental health care in the game as a result of the investigation, including mandating full-time psychologists at clubs.
AFL chief executive Andrew Dillon and league football operations manager Laura Kane would not discuss many details of the investigation, citing medical confidentiality.
Dillon cited confidentiality when asked if drugs or alcohol were involved in Hollands' health episode.
"It was absolutely a mental health episode. That's where our inquiries have taken us," Dillon said.
Dillon said the league conducted its own inquiries after receiving a report from Carlton and added the club had accepted the penalty.
"We found that there was sufficient visual cues, performance data, during the match, and an understanding of Elijah's individual circumstances, to indicate that he should have been removed from play earlier than he was," Dillon told reporters in Melbourne.
"The delay ... resulted in an outcome that brought the game into disrepute. These findings have been made against the Carlton Football Club collectively, not against any individual."
Hollands was admitted to hospital four days after the Collingwood match, in which he managed only one disposal, which was ineffective.
The 24-year-old has previously spoken of his mental health issues, and coach Michael Voss claimed Carlton were being "bullied" while defending the club's management of the 47-gamer.
Dillon said the Hollands scenario was "unprecedented" and a pivotal moment for the league.
"What transpired during the game was something we haven't seen before," he said.
"And while Elijah did undergo checks, he should not have been left on the field for that period of time.
"The incident has highlighted something important for our game. Whilst our physical injury protocols are strong and well understood, mental health presentations can be variable and are complex.
"That means we need to strengthen and standardise how we respond on match day to acute mental health episodes."
Kane outlined a number of mental health measures the AFL will take, adding the League had been reviewing health care governance across the competition since late last year.
"As a result of that work and in light of the (Carlton and Hollands) circumstances ... we will improve industry-wide healthcare governance standards," she said.
"This has to be about care, clarity and action and this is bigger than one club and one night.
"There are lessons in this for all of us - the main one is that our duty of care must continue to evolve and that must include mental health and wellbeing."
Dillon also confirmed a WorkSafe investigation was underway into what happened at the game.
In a club statement, Carlton said they would continue to work with medical professionals to support Hollands, whose health and wellbeing remained the "highest priority".
It said the club understood the public's interest to hear "further context" on the matter, but it would be "unable to disclose sensitive and private information".
"Our support for Elijah comes from a place of genuine care and understanding of him and the challenges he has been experiencing," Carlton CEO Graham Wright said.
"Our club stands in unwavering support of its medical and wellbeing staff, who continue to conduct themselves with the highest level of professionalism, integrity, and genuine care for all our players and staff.
"We accept the outcome in the interest of enabling all parties to move forward, while continuing to ensure the health and wellbeing of our people remains a priority."
Wright added: "Elijah is taking the necessary time to prioritise his health and wellbeing right now and he will continue to do so with our full support."
AFL Players' Association (AFLPA) CEO James Gallagher welcomed the AFL's review, adding the AFLPA supported the League's finding that Hollands should have been taken off the field earlier.
"We accept the finding that Elijah remained on the field for too long, which should not have happened," Gallagher said in a statement, adding the AFLPA would "continue to support Elijah and his family".
"The opportunity to improve governance, policy, resourcing and education to better support the mental health of players is an important outcome of this review."
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