In making the argument, the Obama administration agreed with the Bush administration's position on the case but insists it came to the decision differently.
A civil liberties group criticized the move Friday as a retreat from promises President Barack Obama made as a candidate.
Holder's effort to stop the lawsuit marks the first time the administration has tried to invoke the state secrets privilege under a new policy it launched last month designed to make such a legal argument more difficult.
Under the state secrets privilege, the government can have a lawsuit dismissed if hearing the case would jeopardize national security.
The Bush administration invoked the privilege numerous times in lawsuits over various post-9/11 programs, but the Obama administration recently announced that only a limited number of senior Justice Department officials would be able to make such decisions. It also agreed to provide confidential information to the courts in such cases.
Under the new approach, an agency trying to keep such information secret would have to convince the attorney general and a panel of Justice Department lawyers that its release would compromise national security.
Holder said that in the current case, that review process convinced him "there is no way for this case to move forward without jeopardizing ongoing intelligence activities that we rely upon to protect the safety of the American people."
The lawsuit was filed by a group of individuals who claimed the government illegally monitored their communications. To proceed with the case, Holder said, would expose intelligence sources and methods.
In its filing, the government stated that the lawsuit "squarely puts at issue whether and to what extent the Government has utilized certain intelligence sources and methods after the 9/11 attacks to detect and prevent further terrorist attacks.
"The 'dragnet' allegations made by the Shubert plaintiffs are similar to those asserted in Jewel v. NSA, No. 09-cv-4373-VRW, and, as in Jewel, the [Director of National Intelligence] and the [National Security Agency] have again demonstrated that the disclosure of the evidence necessary to address these allegations would cause exceptionally grave harm to national security and, therefore, that the privileged information must be excluded from this case.
"In addition," the filing continued, "because disclosure of the privileged information would be necessary for plaintiffs to establish their standing and to litigate any claim in any further proceedings, the Court should grant summary judgment for the United States and Government Defendants as to all claims against all parties."
Gov't Motion to Dismiss/Summary Judgment
A.G. Holder Memo on State Secrets Privilege
Exhibit: Director of National Intelligence Dennis Blair
Exhibit: Director of National Security Agency Keith Alexander
Holder said U.S. District Judge Vaughn Walker, who is handling the case, was given a classified description of why the case must be dismissed so that the court can "conduct its own independent assessment of our claim."
The attorney general said the judge would decide whether the administration had made a valid claim and "we will respect the outcome of that process."
That is a departure from the Bush administration, which resisted providing specifics to judges handling such cases about what the national security concerns were.
Kevin Bankston, a lawyer for the Electronic Frontier Foundation, a civil liberties group in San Francisco that is pursuing a similar lawsuit against the government, called Holder's decision "incredibly disappointing."
"The Obama administration has essentially adopted the position of the Bush administration in these cases, even though candidate Obama was incredibly critical of both the warrantless wiretapping program and the Bush administration's abuse of the state secrets privilege," said Bankston.