The Black Cats' form in the Barclays Premier League has been patchy and remains O'Neill's primary concern, with few goals scored and six draws to show from their first eight games.
However, O'Neill knows that winning some silverware will be a huge boost for the club after Sunderland lost out at the quarter-final stage of the FA Cup to Everton last season.
A worry ahead of Tuesday's tie with Boro is that he has several injuries to consider, with a Premier League fixture against Aston Villa on the horizon at the weekend.
"I'm pleased to have the game. I would rather be in the competition than out of it," O'Neill said.
"Of course you want players who've had less time in recent weeks to get on the field of play and it's a fine balancing act but the most important issue is to win. It's a tough call.
"It's a tough game and we might have to make a couple of changes in our side and a couple of enforced changes as well. I'll see how the injuries are later on but there are a couple of players with a few problems but we'll go as strong as we can and try and win.
"For today I'll keep those to myself but I'm hoping there's one (player) that can come through that if not then too bad."
The prize of winning - a place in the last eight - is incentive enough for O'Neill.
He said: "Sunderland won't be the only club hoping to get silverware on the table. I can think of a few others who would be considered bigger clubs than ourselves who are finding that a struggle.
"For us the immediacy of it all is that it offers the chance of getting into the quarter-finals of the competition.
"That in itself should be a big enough incentive for both teams and that's the way it will go. A derby game."
Sunderland faced local rivals Middlesbrough twice last season in FA Cup competition, with O'Neill's prevailing in a highly-charged replay at the Riverside Stadium.
Middlesbrough, who currently third in the npower Championship, are in a good run of form having secured 10 points from their last five games. Sunderland received a boost ahead of the game as midfielder Lee Cattermole signed a new deal.
Cattermole, who started his career at Boro, put pen to paper on a contract that will keep him on Wearside until 2016.
O'Neill said of the new deal: "I am pleased. He's a very good captain and is excellent in the dressing room with the players. "I think now he needs to look at his own game in terms of discipline and maybe just feeling he can settle down now. "He's committed himself to the football club which as I say I'm very pleased with. We're hoping now that we can get him on the field more often than off it."
Cattermole, whose sending off against MK Dons in the third round was the seventh red card of his career, said he was "absolutely delighted" about the new deal and is looking forward to the cup tie against his old club.
He said: "The gaffer is keen on the cups and doesn't take them lightly. Look at the teams we put out against Morecambe and MK Dons. "We're looking to progress and this is a great chance to pick up some silverware.
"I remember the draw [for the FA Cup] being announced last season after we'd beaten Peterborough, and I was happier than anyone that we drew Middlesbrough.
"But I pulled my hamstring on the Friday before the game, which was devastating. I was playing really well at the time and was really looking forward to the game.
"It's a great game for me and my family as well."