The 36-year-old, who began his career at Parkhead before moving to Old Trafford, has been undergoing treatment in the USA for what is understood to be pancreatic cancer last month before returning home.
Speaking at a press conference ahead of his side's World Cup playoff against Denmark, O'Neill expressed his shock.
"I heard about it just recently but didn't know how bad it was". All our thoughts go out to them.
"He's a very young man, 36 years of age".
Miller played on Wearside for three years from 2006 to 2009. "We are all thinking of him and his family and hope he can pull through and be strong".
Former Manchester United midfielder Liam Miller is reportedly battling cancer.
"The thoughts of everyone at Manchester United go out to Liam Miller and his loved ones at this hard time", read a post from the club's official Twitter account.
Charlie Adam tweeted: "Thoughts are with Liam miller and his family at this tough time.#staystrong".
The Scottish champions said in a post on their official Twitter account: "The thoughts and prayers of everyone at Celtic Football Club are with Liam Miller and his family at this time".