At half-time, O'Neill's team looked well beaten by one of the favourites to win the FA Cup when they trailed to goals scored by Roberto Di Matteo and Mark Hughes.
The Leicester manager said: "All credit to Chelsea, they were absolutely fantastic in the first half. But we showed them too much respect and we conceded two daft goals.
"At 1-0, I just wanted to get to the break to try to reorganise. But then we went and conceded a second goal, and from then on it was always going to be an uphill challenge.
"But my players stuck to their task and they were absolutely fantastic. It was a magnificent effort to pull it round."
Steve Walsh scored Leicester's first goal in the 52nd minute and the home side's pressure eventually paid off when Eddie Newton steered a Garry Parker free-kick into his own net two minutes from time.
O'Neill said: "It was vitally important for us to get a goal in the first 15 minutes of the second half, and when we did score it gave us a lot of spirit and a big lift.
"We responded with a bit of passion and a bit of desire and we deserved the draw in the end. But as soon as we scored the equaliser we never got the ball for the last couple of minutes.
"As Alan Hansen will tell you, that's absolutely criminal."Reuse content