The midfielder hobbled off during Sunderland's goalless draw with QPR last month after suffering suspected medial ligament damage and travelled to London to see a specialist.
Cattermole is now likely to be out until early February, which could see him miss as many as 12 matches as Sunderland bid to pull away from the Barclays Premier League relegation zone.
O'Neill is now considering whether to recall midfielder David Meyler, who is on loan at Hull until the start of next month.
The Black Cats boss said of Cattermole: "He'll probably be about another two months. I knew the news wouldn't be too good. It could have been worse but obviously it could have been better."
There was better news on striker Steven Fletcher and defender John O'Shea, with both in contention for tomorrow's clash against Chelsea at the Stadium of Light.
O'Shea has trained this week after recovering from a calf problem while leading scorer Fletcher was substituted at half-time in last weekend's defeat by Norwich because of an ankle injury.
O'Neill said: "He's (Fletcher) seen the specialist this week and he's done some remedial work, and we'll see how he is towards the end of the day.
"He's important to us obviously. He's had a fine season and he's scored a few goals for us but we can't place all the emphasis on one or two players."
- Sports & Recreation