O’Neill spent five years in charge of Celtic, winning three league titles and having some ding-dong battles with Rangers during the Dick Advocaat and Alex McLeish eras.
The Irishman considers the current squad to be a pale imitation of those sides, though he does believe Celtic need a strong Rangers in order to grow in European football.
He told Talksport: “Rangers are not strong at all. In fact, it is possibly the poorest side I’ve ever known at Ibrox.
“For Celtic to stay strong and be strong in Europe, they need opposition and they need it to come from Rangers.”