The 21-year-old right-back, a former England youth international, has agreed a two-year deal with the Clarets for an undisclosed fee to become manager Eddie Howe’s first new signing of the summer.
O’Neill started his career in Leicester City’s Academy, going on to make three senior appearances for the Foxes, as well as gaining Football League experience with a loan spell at Tranmere Rovers in 2010.
Following a three-month spell with Kettering Town, the Slough-born defender then joined Mansfield last August and started all but three games as the Stags reached the Blue Square Premier play-offs.
His performances attracted the attention of a number of Championship clubs and Howe believes the capture of O’Neill will help provide valuable squad strength as he looks to re-shape his playing resources for the coming season.
“I am delighted to welcome Luke to Turf Moor. As a manager you always want players snapping at the heels of those wearing the shirts. To do that we need to build a squad,” said the Burnley boss.
“To be successful you need that strength in depth and Luke is a welcome addition.
“He is in the attacking mould and likes to get forward. He has a lot of assists to his name and although he prefers right-back, he can play in a variety of positions across the back.
“He brings that versatility and has huge potential. Luke is a player who has done it the hard way by dropping down to Conference level.
“He is hungry, has played for England at U17 level and has gained experience of league football at several clubs, so we look forward to working with him and hopefully improving him as a player.”
O’Neill’s arrival will give further competition for places in the Clarets’ back four and also give Howe greater flexibility in the development of the first-year professionals who have graduated from the successful youth set-up of last season - such as Aryn Williams, Alex Coleman and Tom Anderson.
“Strengthening the squad also gives us the opportunity to loan out the youth team players from last year, giving them exposure to League football at a lower level and helping them progress,” Howe added.