O'Neill has guided the Black Cats to two wins and a draw in his first four Premier League games in charge of the club.
Sunderland began the month with a last-gasp win over Blackburn at the Stadium of Light, with Sebastian Larsson's 90th-minute free-kick sealing all three points in the Ulsterman's first home match.
A 1-0 loss away to high-flying Tottenham followed, but the Black Cats bounced back with a thrilling 3-2 win away to Premier League new boys Queens Park Rangers, with Wes Brown scoring the late winner.
The Boxing Day fixture at the Stadium of Light saw the points shared as Everton came from behind to claim a 1-1 draw.
This is the eighth time that O'Neill has won the Barclays Manager of the Month Award in his career, and the first since he took the reins at the Stadium of Light following Steve Bruce's departure.
Newcastle striker Demba Ba has been named Barclays Player of the Month after scoring five goals in six Premier League games during December.
Ba's first season at Newcastle has already been a huge success, with the Senegalese frontman producing a series of impressive performances.
In early December, despite Newcastle's form dipping for a few matches, he scored doubles in the games against Norwich and West Brom.
Newcastle recorded their first win of December away to Bolton, with Ba scoring the second goal in a 2-0 victory for Alan Pardew's men.
It is Ba's first Barclays Player of the Month Award, and the Senegal international has now scored an impressive 15 goals in just 19 Premier League games for Newcastle since his summer move from West Ham.
Both decisions were made by the Barclays Awards Panel, which includes representatives from football's governing bodies, the media and fans.
