The Sunderland manager remains an admirer of the midfielder's quality but insists that he must change his poor disciplinary record after being sent off against MK Dons
The 24-year-old was sent off for the seventh time in his career on Tuesday after a reckless challenge on Adam Chicksen in the 2-0 victory over MK Dons in the third round of the League Cup.
Cattermole will now sit out Sunderland's next three games, including the clash with arch-rivals Newcastle on October 21.
"I have had a wee bit more time to reflect on it, and certainly Lee has as well - he's got most of a month," O'Neill told Sky Sports.
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"He is obviously very, very sorry, but 'sorry' doesn't help us now, not only over that particular game itself, which we could have lost, but the games coming up now.
"He does so many good things for us, both as a player and as a captain as well," he claimed. "But you can't be that rash. You can occasionally, but you have got to learn, and more so than ever before now.
"You can't be lunging in at players, your foot off the ground, now. You can hurt an opponent, that's obviously the problem and that's why referees are, in the main, cracking down on it.
"If you overrun the ball, sorry, you will just have to let it go. Let it go and don't be lunging in to try to win it and the possibility of being sent off the pitch."