The former Aston Villa manager saw plenty of promise in the showing at Craven Cottage, which certainly provided more cause for optimism than Sunday's 2-1 loss to Turkey.
After a shaky start Ireland soon began to dominate proceedings and created good openings for Shane Long and Anthony Pilkington, but neither were able to convert.
While Italy did threaten at times it was their opponents who looked more dangerous and, after Long had missed another chance, they went closest as substitute Stephen Quinn hit the bar late on.
O'Neill was pleased with the attitude on show and expects his squad to go into their matches with Costa Rica and Portugal in June with renewed confidence.
"We were disappointing (early in the game)," he told Irish television station Setanta. "David Forde kept us in it with a couple of great saves, but outside that we were phenomenal.
"We played some good stuff, I thought we were magnificent.
"We got a little nervous (at the start), but suddenly roared into the match.
"It was great game despite the scoreline, and we go into the next games with some confidence.
"There is genuine disappointment we haven't won the match."
