Ms O'Neil arrived in Sri Lanka on Monday ahead of talks with President Gotabaya Rajapaksa, along with the country's prime minister and foreign minister.
The talks come amid the interception of multiple asylum seeker boats heading to Australia to escape Sri Lanka's economic crisis, the worst the country has experienced in 70 years.
Ms O'Neil will discuss how the two countries could cooperate on people smuggling, as well as strengthening engagement on transnational crime.
The visit comes as the federal government provides $50 million in development assistance to Sri Lanka, which is dealing with widespread food, fuel and medicine shortages.
Of the $50 million in support, $22 million will be given immediately to the World Food Programme for emergency food assistance.
A further $23 million will be given in assistance throughout the 2022/23 financial year, while $5 million has been given to United Nations agencies dealing with the crisis.
Opposition Leader Peter Dutton said he did not believe the economic circumstances had changed over the past six months in Sri Lanka.
But, rather, Operation Sovereign Borders had been "abandoned" under Labor, he said.
He said the coalition government had been able to deal with the pressure from Sri Lanka in terms of people-smuggling operations.
"But already we've had four (boats) that we know of, that have attempted to make their way here and dozens of others that have been stopped coming out of Sri Lanka," he told Sydney radio 2GB on Tuesday.
"The only thing that's changed ... is that we've got a new government."
Prime Minister Anthony Albanese on Monday reiterated the government would not allow for asylum seekers looking to flee Sri Lanka by boat to Australia to be resettled.
He said the government's message to people smugglers was clear.
"We will be strong on borders without being weak on humanity, but we will be strong when it comes to our borders."
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