Tipperary's Shane Long put Ireland ahead in the first half but the Serbs grew into the game creating several chances.
Irish manager O'Neill said there were many positives despite enduring his first loss as Irish boss.
Elsewhere Daniel Sturridge headed the only goal as England beat Denmark 1-nil at Wembley in a friendly last night.
He was one of 5 Liverpool players selected by Roy Hodgson to start the match.
Gareth Bale scored one and made two goals as Wales won 3-1 win against Iceland in Cardiff.
Scotland were impressive 1-nil winners away to Poland while Northern Ireland played out a scoreless draw away to Cyprus.
