Larsson's agent Rob Jansen has been negotiating an extension to the player's current deal which still has nearly one-and-a-half years left to run.
The day after both player and manager collected their respective awards for their achievements this season, O'Neill was optimistic about prolonging their involvement.
"I think there will be something done very shortly and our contracts manager is meeting his agent in the next four or five days," said O'Neill.
Superb form
"I would certainly like that to be put to be bed before the end of the season."
Larsson picked up the Scottish Football Writers' Association Player of the Year award in Glasgow on Sunday night.
He adds that to the Players' Player of the Year prize he won earlier in the season.
Larsson has been in superb form during Celtic's treble-chasing season, with 51 goals so far.
O'Neill was named Scottish Football Writers' Association Manager of the Year after an amazing first season in Scotland.
Celtic were crowned league champions five weeks before the end of the campaign and, with one game remaining, have the chance to reach a record-breaking 100 points.
Success in the CIS Insurance Cup means that a domestic treble is a target for O'Neill, with his men facing Hibernian in the Scottish Cup final on 26 May.