The 28-year-old looked to be heading for the exit door at the Stadium of Light following the summer arrivals of John O'Shea and Wes Brown from Manchester United to add to a squad which already included Titus Bramble and Michael Turner.
However, with Bramble and Turner both injured, Kilgallon found himself on the substitutes' bench for the Premier League clash with leaders Manchester City on January 1, and when Wes Brown succumbed to a groin problem, he was thrust back in the limelight, and has been there ever since.
O'Neill, who replaced Steve Bruce as manager last month, said: "I hadn't seen that very much of him, other than little bits in training, of course.
"He got the opportunity the other week when Wes Brown got injured. He went on to the field and he has acquitted himself very well so far in the games.
"I think he is just pleased to be involved at this minute where perhaps he didn't have involvement before.
"Now, that's fine. I have been at football clubs where players maybe didn't get the same sort of involvement before, and then suddenly it happens for them either with the manager there or with someone else in.
"It's the case with not just Matt himself, but with other players. If they feel as if the team has done well and they hadn't been a serious part of it, when they get that opportunity, they might as well give it everything they have got.
"I think that applies here."
Kilgallon has started the two games since the shock 1-0 win over the leaders - at Wigan in the league and Peterborough in the FA Cup third round - and has finished on the winning side in both of them.
In the process, he has re-established himself as a genuine first-team player and perhaps given himself a future on Wearside when his days appeared to be numbered after loan spells at Middlesbrough and Doncaster last season.
At one point, it looked as though he might have been heading out of the club, as former team-mate Nyron Nosworthy did on Tuesday when he joined Championship Watford on a permanent deal.
As O'Neill assesses his options with the winter transfer window now open, several of the club's younger players could follow him, although only on loan, this month with midfielder Billy Knott and striker Ryan Noble among those currently being coveted.