O'Neill was relieved of his duties with the Black Cats on Saturday evening, and Lawrenson has slammed the decision, claiming that the squad inherited by the Northern Irishman was not up to the standard required.
"Nothing surprises me in football any more but I'm shocked by the sacking of Martin O'Neill," Lawrenson wrote in his column in The Mirror.
"The squad Martin inherited has just not been good enough. As a result he has not been able to produce the style of play that was the hallmark of his teams at Wycombe, Leicester, Celtic and Aston Villa.
"There are good players at the Stadium of Light. Steven Fletcher is a good centre-forward, Stephane Sessegnon is a good player and Adam Johnson is a decent player on his day. The trouble is there are not enough good players in that dressing room."
O'Neill has been replaced at the Stadium of Light by Paolo Di Canio, who was announced as the manager on Sunday night.