O'Sullivan admitted: "Initially, we though he had ruptured his cruciate ligament and when I got the call last Saturday to say that it was just the meniscus ligament, I was very relieved."
Right winger Horgan has become a talisman for Ireland in the past season, scoring six tries in his last 13 Test match appearances.
His Leinster and Ireland team-mate O'Driscoll said: "He's definitely a big loss for us, particularly from my point of view. We know each other extremely well, both attacking-wise and defensively. He can read my game and I can read his.
He's a senior player in our team, having just got 50 caps back in November. Any guy that has played 50 times for his country is going to be a loss and the form he has hit in recent months will make it that much tougher to deal without him, but unfortunately you get these injuries and you just have to move on."
Ireland's Six Nations encounter against Wales on February 4 is sure to rekindle good memories for the Munster players in the squad as they run out at the Millennium Stadium for the first time since they beat Biarritz to lift the Heineken Cup last May.
"The confidence the Munster guys got from winning a crunch game like that, with so much pressure on them having already been in that position two previous occasions, has definitely made them stronger players, so for Ireland that has to be a good thing," O'Driscoll added.
"Ronan O'Gara, for one, has taken another step forward since winning that game. The confidence that gave him and other players like Peter Stringer will be invaluable."
Asked about his prospective midfield opponents in Cardiff on Sunday week and Gavin Henson's expected switch to full-back, the Irish skipper said: "I presume it's going to be (James) Hook and (Tom) Shanklin, if he gets over his injury, in the centre and I guess the Welsh management just felt that they wanted Gavin in the team.
"He's got a sizeable boot and if you kick the ball badly down to him he'll punish you for that. He can be a very threatening runner as well and defensively he's very strong.
"So I feel as though they want to get their best players into their side and Gavin fits into that criteria. Good players can play in a lot of positions. I guess that's why they've got him into the back line."
The Irish squad trained twice at Croke Park, their home ground for the 2007 Six Nations, on Wednesday and Thursday, and will reassemble at the team hotel on Sunday ahead of Wednesday's team announcement for the Welsh clash.