Fletcher, 25, signed a four-year contract at the Stadium of Light for an undisclosed fee and will be available for the Black Cats' Premier League game against Reading tomorrow [Saturday].
The former Burnley and Hibernian forward has been O'Neill's top target in his bid to bolster his attack following the departures of Nicklas Bendtner and Asamoah Gyan, with Louis Saha already signed up earlier this month.
The deal was ratified ahead of the midday deadline meaning Fletcher could make his Black Cats debut tomorrow [Saturday].
O'Neill said: "I'm delighted. I've just come from the training ground and I'm delighted it's all gone through.
"I think Steven will be terrific for us. He's underrated, but not by me.
"I think he's capable of scoring goals and linking play which is very important to us and I think now at 25 years of age he's got room to improve and really get better.
"Wolves lost their Premier League status last season but I think he's very good and I think he's improving.
"He hasn't played that much. He had a setback a few weeks ago so in terms of fitness he didn't train with us today but I'll assess him anyway.
"I'm delighted to have him for the next few seasons."
However, O'Neill remained coy on his interest in Manchester City winger Adam Johnson and striker John Guidetti.
He said: "At this minute I cannot furnish you with many more details. I was hoping that we might be able to do so, so if you allow me to be pretty hesitant on that one, I'll refrain because I really can't tell you anything on a serious note.
"I'm still trying to improve the team, obviously.
"Like everything else we need some more help and we're trying to provide that and get that there before next Friday evening.
"As good as they are, I don't think our players can do it on their own and the more help we can get there the better."
With the Fletcher deal finally wrapped up after a lengthy process, O'Neill expects a tough challenge against newly-promoted Reading in Sunderland's first home game of the season tomorrow [Saturday].
While the Black Cats took a well-earned point from Arsenal in a hard-fought draw at the Emirates in their opening game, the Royals lost out 4-2 to Chelsea at Stamford Bridge on Wednesday following their opening draw against Stoke.
"It's a very important game for us tomorrow [Saturday]," O'Neill said.
"This is the most difficult time of the season [to play promoted sides].
"That exuberance, Reading have in abundance and they can also play a bit too. They will consider themselves unlucky not to get something against the current European champions away from home.
"I know from experience these games are not easy. We're certainly not good enough to treat anyone lightly which I've said in the past but I'm not decrying us in any shape or form, it just means that we've got to be at it."
O'Neill also refused to play down the point won at Arsenal in a defensive display, but admitted his side need to be on the front foot tomorrow [Saturday].
He said: "It was a proper plus last week and I don't think we can disregard that. The point at Arsenal was well-earned.
"We're at home now. We want to show our attacking options and we want to score some goals this season. That's one of our aims, if not priority.
"I thought on Wednesday night, Reading played very well indeed, against Chelsea they were excellent.
"All the things you would expect from a side coming up - exuberance and a vitality about them but I thought they were a constant threat and that's what made them very dangerous.
"I expect them to be fearless with a lot of vitality to their game."