Asked if he feels his side will win the World Cup, O'Sullivan said: "I can't say we won't win it but I don't know. Are we capable of winning it? We are. The reason I say that - and I'm not being bullish - is that we have shown in recent years that we are capable of beating the top teams. You have to beat them at some point in the tournament but we know we are capable of beating them on the day.
"We have beaten Australia and South Africa, we know we can beat France - though we don't do it often enough - but we know we are capable of it," he added.
"There is nothing wrong with saying that you can win but you have to do it and the way to do it is to get out of the group, then you are 80 minutes away from a semi-final and 80 minutes away from a final and 80 minutes away from winning the World Cup. That's the logic to pursue. I don't think there is anything wrong in saying that. Whether we will win or not remains to be seen. I don't have a problem in facing up to that."
Ireland begin their World Cup campaign against Namibia in Bordeaux on September 9 and O'Sullivan wants his side to walk the walk as well as talk the talk.
"The team we have at the moment are very focused, very hungry, it's a good team, a good squad. I don't think having that ambition (to win the World Cup) is wrong - it is a healthy ambition. If we don't have it now we will never have it and I would not be afraid to say that. But talk is cheap - we have to go out and do it."
There has been much debate around the rugby world about the validity of having summer tours in a World Cup year, with many of the recent matches seeing both home and touring nations field weakened and inexperienced teams as the top players are wrapped in cotton wool ahead of the global showpiece.
Offering his opinion, O'Sullivan said: "I think it will be formalised that summer tours won't happen in a World Cup year. I know there is a bit of bellyaching in New Zealand that teams didn't travel. I think in a World Cup year that is going to happen.
"We used our tour (to Argentina) to find out about our lads. I don't think if we had won our two games people would be saying we are a certainty to beat Argentina in France. It doesn't have a huge bearing on what happens in the tournament.
"It is up to everyone to get what they need out of the tours, but I don't think they will have a huge bearing on what happens in France."
Ireland's September 30 meeting with Pool D rivals Argentina is arguably the crunch World Cup game for O'Sullivan's charges. The Pumas announced their RWC squad earlier this week and the Irish boss added: "I think Argentina have been unfortunate with some injuries but they have a very seasoned squad playing top level rugby. We know each other very well - at international level or even at Heineken Cup. There are no secrets there.
"You asked if we are a better team than four years ago? Of course we are but they are too. I wasn't surprised at their selections."