A hydraulic system is disclosed. The hydraulic system may have a pump, a tank, a displacement actuator having first and second chambers, a regeneration valve, and a load-holding valve. The hydraulic system may also have a displacement control valve including a valve element, and a stationary cage portion at least partially forming a high-pressure passage fluidly connecting the pump and valve element, a low-pressure passage fluidly connecting the valve element and tank, a first displacement actuator passage fluidly connecting the valve element and first chamber, a second displacement actuator passage fluidly connecting the valve element and second chamber, a load-holding control passage fluidly connecting the valve element and load-holding valve, and a regeneration control passage fluidly connecting the valve element and regeneration valve. The displacement control valve may also include a movable cage portion that is movable to selectively restrict fluid flow through only the first and second displacement actuator passages.