Summer signing Adam Johnson returned to haunt his former side with a 53rd-minute strike that beat visiting goalkeeper Joe Hart, who was caught flat-footed and allowed the ball to squirm past him.
Asked if the showing was the Black Cats' best of the season, O'Neill said: "Considering the opposition, I would have to say yes.
"We gained a bit of confidence from winning against Southampton and took that into the game, but we knew there would be times when we would have to play without the ball and we would have to defend strongly, and we did both of those very well.
"And yet we were able to carve out some great chances in the game."
Manchester City boss Roberto Mancini labelled Sunderland "lucky" to claim the three points, but O'Neill was not in the slightest bit interested in the Italian's view.
He said: "Honestly, I am really not particularly bothered, I am genuinely not bothered about what Roberto Mancini would say about the team.
"I have seen it before with other managers. I'm not bothered. I thought we were terrific."
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