Abstract: A hydraulic knife holder for a slitting machine is provided which includes a first fluid chamber for exerting pressure on the inner surface of a hydraulic holder, and a secondary fluid chamber in operative contact with the first fluid chamber, and which is connected to a movable piston which can be moved to increase or decrease the pressure within the first and second chambers. By movement of the piston, the inner diameter of the holder can be adjusted so as to cause the holder to be locked onto the arbors of the slitting machine, or released from the arbor. No fluid is lost from the system during adjustment, and the holder is particularly well suited for adjustment using an automated knife positioning system.