O’Sullivan, 22, started his career at Cardiff City before loan spells at Port Vale and Newport County.
He joined Colchester in 2017 and has made two first-team appearances to date.
Head coach Gary Owers told his club`s official website: “I watched him a lot when he was at Cardiff, and Newport when he was on loan.
“He’s an attacking midfielder that is hopefully going to add something to the squad and make us stronger.”
O`Sullivan (pictured) follows hot on the heels of the arrival of highly-rated striker Alex Fletcher from League One side Plymouth Argyle on a month`s loan.
Fletcher, 18, has made eleven appearances for Argyle this season and scored a brace in their win over Chelsea under-23s in the Checkatrade Trophy this season.
He then followed that up with his first League goal against Fleetwood Town in early October.
“He’s a young lad that I have seen play a few times,” said Owers. “He looks like he has got a goal in him – hard working. He gets in good areas – not a target player but competitive in the air. I’m hopeful he can come in and score us a few goals.”
In addition, Owers has moved to extend defender Michee Efete’s stay at Plainmoor.
Efete, 20, joined United in September from Championship side Norwich City on a loan deal until January, but that has been extended until the end of the season.
“He’s a young player that is steadily improving,” said Owers. “He wants to remain with us to try and develop. I’m pleased he has decided to stay.
“He adds some flexibility because he can cover the right wing-back or full-back position as well as centre-half.”
Meanwhile, defender Jazzi Barnum-Bobb has left Plainmoor after his loan spell expired.
After receiving a straight red card against Maidstone United, Barnum-Bobb did have one game left to play during his loan spell. However, the postponement of the New Year’s Day fixture against Eastleigh meant that his suspension carried over to include Saturday’s match against Wrexham.
(Photo: Pinnacle Photo Agency)