The switch reverberated somewhat around the upper echelons of English football, mainly due to the success O'Neil had brought the club in his brief tenure at the helm.
Taking over from Scott Parker in November last year with the club languishing near the foot of the Premier League table - and not long after a humiliating 9-0 thumping at the hands of an out-of-form Liverpool - O'Neil steadied the ship and guided the Cherries to comfortable safety by April with four games to spare.
His name was mentioned amongst the likes of Pep Guardiola, Mikel Arteta and Roberto De Zerbi as a major contender for the best-performing manager of the season.
But Bournemouth's owners saw fit to change this week, revealing in a press release that "the difficult decision has been made with great consideration to best position ourselves ahead of the coming season."
Harsher still is the apparent manner in which the young coach was let go, with O'Neil said to have been left "shellshocked" by the ruthlessness of a 6am phone call from his former bosses.
It caught him by surprise, as the former West Ham and Norwich player was reportedly studying potential signings when he received the news.
The move was such a shock that bookies immediately switched things up and made Bournemouth an almost odds-on favourite to go down next season.
So what has brought about the decision?
O'Neil delivered a return of 10 wins and six draws in the Premier League, which was enough to maintain the club's position in the top flight. Along the way, they picked up some memorable wins against the likes of Tottenham, Leicester, Everton and Liverpool, as well as an enjoyable away victory against south coast rivals Southampton.
That being said, once survival was secured they did take their feet off the gas, succumbing to four consecutive losses as the season concluded.
Perhaps that run of results was enough to set the sirens off in the board room.
Iraola joins Bournemouth after guiding Rayo Vallecano to an 11th-placed finish in La Liga last season, following a successful three-year spell at the Spanish club that saw him gain promotion to the top division.
He's a relative unknown on these shores though, so the move poses a big risk given the success and plaudits O'Neil brought.
South coast similarities
It does strike up some memories of a similar instance in the past that their southern neighbours Southampton also pulled - and one that worked.
In January 2013 Nigel Adkins was sacked by Southampton in what was seen as another surprise move, given the boss had worked wonders in returning the club to the Premier League.
In three seasons Adkins had led Southampton to back-to-back promotions from League One to the Premier League, and Southampton were sitting where many expected them to be in 15th place with 22 points from 22 games.
But the board moved to remove the Englishman, replacing him with a then-unknown Mauricio Pochettino, who had just left his role at Espanyol.
That proved to be a masterstroke as the Argentine would get the Saints playing some excellent football. In his first full season at Southampton, Pochettino led the team to an eighth-place finish, their highest league position since 2002–03, while also recording their highest points tally since the Premier League began in 1992–93.
And while his stint was fairly short, it was no doubt a success, with the now Chelsea manager going on to cement his reputation as an excellent coach with spells at Spurs and then PSG.
Who knows if Iraola can emulate such success with Bournemouth, or whether the appointment will be more akin to a Frank De Boer at Crystal Palace, or a Bob Bradley at Swansea.
The bright side for O'Neil
For O'Neil, at least he can rest knowing that the football world felt he did an excellent job during his time at the Vitality Stadium.
Coming into the role in difficult circumstances, few felt they had any chance of survival. To bring them back from the brink with time to spare is an excellent feather in his cap - and one that will be remembered amongst football fans in the years to come.
And when it comes to future employment, he'll no doubt find his way back into a decent job before too long - if that's what he wants.
A pedigree for keeping sides up is a solid selling point to have and one that can put you in the frame almost every year - just ask the likes of Sam Allardyce and Roy Hodgson.
It could be that he finds his way to the Championship in order to build a full project where he'll be allowed some time and respect, which would be a wise move. He needn't be looking further down the pyramid.
But don't be surprised if by November or December O'Neil is being discussed for a tail-end Premier League job. Perhaps we'll see him leading a Luton, Sheffield United or - who knows - even Bournemouth in the not-too-distant future?