Contract talks between O'Neill and the IFA board were concluded on Tuesday, meaning the match against Turkey on November 15 has been recast from mid-season friendly to step one in the national side's Euro 2016 campaign.
O'Neill named a strong 20-man squad for that match less than an hour after it was confirmed that he would be staying in his post and he believes everybody is pulling in the right direction to improve on a fifth-place finish in World Cup qualifying.
Indeed, the former Shamrock Rovers boss has won just once in 14 matches since taking over from Nigel Worthington but his diligent work with Northern Ireland's age group sides and his commitment to blooding a new batch of senior internationals persuaded his employers of his value.
"I was extremely keen to stay. The contract actually wasn't a major thing, it was quite straightforward because the discussions we had were that everybody at the association wanted me to continue," O'Neill told Press Association Sport.
"I've been working for two years now and I want to continue that development of the team and the squad and hopefully make sure we have better results in qualifying next time.
"When I took the job on I knew the situation: at this moment in time there is no shortcut. The players we have available are the players we have available and we have to mould them into a team.
"It's not as though I can bring in 10 or 11 new faces but this is a relatively young squad and I've already introduced some relatively inexperienced players. Hopefully one or two younger ones will come through to join them in the next couple of years.
"Coming into the job I knew I wasn't just managing an international team. We've restructured the age level groups, we've been getting the right people into the jobs at that level and I've been assisting them with whatever they need. That will continue.
"When I was appointed Northern Ireland manager I was honoured to have been chosen to manage my country and I am extremely happy to have agreed a new two-year deal."
IFA president Jim Shaw has been a vocal supporter of O'Neill during his tenure, and he said: "I am delighted that Michael has agreed a two-year extension to his contract.
"I have no doubt that he will be able to build on the work he has already done and will take us forward in the Euro 2016 campaign.
"Michael is a true professional who has passion and pride, something which he showed as a player for his country and now as a manager, and I believe he is the right man for the job of Northern Ireland manager."
O'Neill will be without Palermo striker Kyle Lafferty, whose wife is due to give birth around the date of the Turkey clash, as well as injured duo Craig Cathcart and Corry Evans, but otherwise has a full-strength panel available to him.