O'Connell insists victory in Sunday's World Cup Pool C showdown is far from guaranteed against a side that have the capacity to send the Irish home on Monday.
"Italy are physical in everything they do. They're very strong up front and have excellent half-backs," said O'Connell.
"They have an excellent backline too. It's always been very tough against Italy over the years and it will be no different to tomorrow.
"They're talked a lot about their scrum, but our scrum's been going really well too.
"A lot of the Italian players are in big clubs in Europe, they play in the French league and the late stages of the Heineken Cup.
"We know knockout rugby but I'd say they do as well."
Italy captain Sergio Parisse insists a flare-up between two team-mates in today's captain's run is a good omen.
Prop Martin Castrogiovanni was struck by fly-half Riccardo Bocchino during a game of touch rugby in the customary eve of match run-out at Otago Stadium.
Tension is mounting ahead of a Pool C collision that will see the winners progress to the quarter-finals and the losers return home.
But rather that view the flashpoint as a sign of discord in the camp, Parisse believes it is evidence Italy are ready to produce something special.
"At the captain's run, as always, we had a game of touch," said the Stade Francais number eight.
"We always play forwards against backs and I don't know why but until now, the forwards always won.
"So today, before the game, I told the backs 'try to beat us at least today'.
"Between Castro and Bocchino, there was a little discussion, because Castro took the ball and Bocchino wanted to stop him and so hit him in the face with his hand.
"Castro, as everybody knows, is not the kind of guy who lets things go easily, but Castro and Bocchino apologised in front of everybody at the end of the session.
"The positive thing is that we are all tense and generally when we are tense like this we play very well.
"Congratulations also to Bocchino. Not everybody would have faced Castro like that!".
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