The French champions needed three points in their home clash with Bulgarians Ludogorets to ensure they finished ahead of Arsenal in Group A.
But PSG's Champions League upset which saw them draw 2-2 meant the Gunners pipped them to first with a 4-1 triumph at Basel.
At the midway stage, Arsene Wenger's men led 2-0 from a Lucas Perez brace while PSG surprisingly trailed 1-0 at the Parc des Princes.
We saw the scores as we were coming in
Rob Holding
And young Arsenal defender Holding, who was handed his Champions League debut in Switzerland, has exposed the team's knowledge of their situation on the night.
"We saw the scores as we were coming in so we knew that, if we kept doing our job, the rest would take care of itself," Holding told the club's official website.
"It turns out it has done so it’s a great night for us."
Five things we learned about Arsenal against Basel
Tue, December 6, 2016Click through the gallery for five things we learned about Arsenal in their Champions League clash with Basel
Click through the gallery for five things we learned about Arsenal in their Champions League clash with Basel
Arsenal's leapfrog of PSG will see them avoid plenty of the big boys from around Europe in the last 16 draw on Monday.
Wenger's men have been in impressive form and will now be looking to progress beyond the next round for the first time in seven seasons.
For Holding, the 21-year-old had the added enjoyment of getting more game time away to Basel, playing the full 90 minutes.
Shkodran Mustafi and Laurent Koscielny have led the way as Arsenal's centre-halves so far this season.
But on the team's depth, Holding added: "We’ve got a great squad here with options in every position and all the players who stepped in produced a good performance.
"All we can do is our best each time we’re picked and I think we’ve done that."