By constructing the configuration of D3-branes with D(-1)-branes as D-instantons, we study the three-dimensional Yang-Mills Chern-Simons theory in holography. Due to the presence of the D-instantons, the D7-branes with discrepant embedding functions are able to be introduced in order to include the fundamental fermions (as flavors) and the Chern-Simons term (at very low energy) in the dual theory. The vacuum structure at zero temperature is studied in the soliton background and it illustrates the topological phase transition in the presence of instantons. Moreover, since the confinement/deconfinement phase transition could be holographically identified as the Hawking-Page transition in the bulk, we accordingly calculate the critical temperature of the deconfinement phase transition by collecting the bulk onshell action as the thermodynamical free energy. On the other hand, we evaluate the difference of the entanglement entropy in slab configuration by using the RT formula since the confinement may also be characterized by the entanglement entropy. Altogether we find the behavior of the critical temperature is in qualitative agreement with the behavior of the critical length determined by the entanglement entropy which implies the entanglement entropy could indeed be a character of the confinement in our setup and the D3-D(-1) system would be a remarkable approach to study the three-dimensional gauge theory.