In 2375, the holoship was employed by Admiral Dougherty and Ru'afo to secretly transport the entire six hundred Ba'ku inhabitants off the Ba'ku planet without their knowledge in order to obtain the metaphasic radiation inherent in the planet's rings.
The ship was cloaked and placed at the bottom of a lake, located near the Ba'ku village. It was later detected by Starfleet personnel, unaware of its presence, due to strong neutrino emissions coming from the lake. Once discovered by Captain Jean-Luc Picard, Lieutenant Commander Data and Anij, Picard ordered the holoship decloaked and thereby exposed to the inhabitants of the planet.
It was later brought back into the planet's orbit, recloaked, by Lieutenant Commander Worf, where it was used to transport the command crew from the bridge of Ru'afo's flagship. This feat allowed Gallatin and Jean-Luc Picard to hijack control of Ru'afo's ship and disable the nearby Son'a collector. The holoship was then decloaked and held in a tractor beam at the order of Picard. Despite all of the ship's transporters being locked and secured by Picard, Worf and Gallatin, Ru'afo was able to reroute the command sequencer on one of the transporters through the auxiliary processor in order to beam himself over to the collector. The Son'a crew later utilized the same method to beam back to their ship. (Star Trek: Insurrection)
The holoship was built specifically to serve as a transportable holodeck used to create holographic environments to simulate the surroundings familiar to the holoship's passengers, although the ship had difficulty maintaining a complete program as the hologrid was visible in some locations. It was also equipped with fourteen long-range transporters and a cloaking device. (Star Trek: Insurrection)
The idea of surreptitiously transplanting an indigenous people by use of the holodeck had already been explored in TNG: "Homeward" when a group of Boraalans were transplanted in the holodeck of the USS Enterprise-D without their knowledge to their new homeworld as their own world became uninhabitable. The concept of the holoship might have stemmed from this incident. The chairs used on the bridge of the holoship were re-purposed from the bridge of the USS Defiant from Star Trek: Deep Space Nine.
The Section 31 novel Abyss, by David Weddle and Jeffrey Lang, establishes that the holoship was created by Section 31 for the Ba'ku incident, which the organization had engineered and had publicly blamed on Dougherty. The holoship was slated for destruction by Starfleet Command after the incident became public; however, Commander Elias Vaughn and his cabal of Starfleet officers covertly working against Section 31 stole the ship and faked destruction reports, later using it to help undermine various Section 31 operations.