The 35-year-old - Phil Parkinson’s tenth senior signing of the summer - has featured for Wanderers throughout their pre-season campaign and will remain with the club until January 2019.
Boasting a wealth of Premier League experience, O’Neil has featured for the likes of Portsmouth, Middlesbrough, West Ham United and QPR.
With over 450 professional appearances to his name, O’Neil arrives at the University of Bolton Stadium after leaving Bristol City last season.
Commenting on his move, O’Neil said: "I'm really pleased to be on board and I just can't wait to get started.
"I've really enjoyed my time at the club so far this summer - they're a really good bunch of lads and we've got some great work done which is the main thing.
"Now though is when it matters and I'm ready to help however I can."
Manager Phil Parkinson added: "We feel that Gary is a good influence around the training ground and the younger players.
"He is a player of high calibre and during this busy period coming up, we'll need as many bodies as we can and when you get a good character like Gary around the building, we felt that it was important that we kept him at the club."
Meanwhile, the club has lodged six-figure bids for two strikers with negotiations continuing.
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