Marc Wilmots' men are much-fancied at this tournament, but fell to a 2-0 defeat in their opener against Italy.
However, with Ireland hoping to build on their 1-1 draw versus Sweden, O'Neill insists that the quality within the Belgium squad makes them a dangerous proposition.
"They have, if you look at them, the most talented set of individual players at the tournament. They are very, very dangerous," the former Sunderland boss said.
"The Italy game was always going to be difficult, they had three or four chances to score and didn't take them and it will be a tough night for us – but we want to make it tough for them as well.
"Belgium play a different style [to Sweden] and they have a very talented squad.
"Little [Eden] Hazard is one of the best players playing in the world right now, they have players playing in big, big matches every week at club football."
Despite these claims, though, O'Neill remains optimistic that his charges can get a result in Bordeaux on Saturday.
"Belgium have a very talented squad, they will be disappointed with the first game," he added. "I am sure they'd have planned to get something from that and Belgium not qualifying for the last 16 is not something they will have contemplated.
"But if we take our performance against Sweden into the Belgium game, we can cause them problems."