The Wallabies utility back struck in the 76th minute, giving the Reds victory after 11 successive defeats by their southern rivals and leaving home fans happy at the end of a scrappy display from both teams.
The first match of Australia's domestic "Super Rugby AU" brought a modest crowd to Lang Park, with groups of fans spaced apart in the terraces to maintain social distancing.
They saw a willing, if error-strewn contest, as players struggled to shake off the rust from a long break following the suspension of the wider Super Rugby competition in March.
Law variations borrowed from rugby league to speed up the game ensured plenty of running rugby, as did ample handling errors, with a slew of counter-attacks sparked by passes finding grass.
The Reds dominated early, surging to a 19-7 lead before the half-hour mark when scrumhalf Tate McDermott punished a dozy Waratahs defence by taking a quick tap and bounding over.
Penalties on either side of the break kept the Waratahs in touch, though, and they charged in front when jet-heeled fullback Jack Maddocks galloped over after a superb inside pass from flanker Lachlan Swinton.
Number eight Harry Wilson snatched back the lead for the Reds by diving over from a metre out but hotheaded prop Taniela Tupou threatened to undo the good work when he was sent off for a second late charge in the 67th minute.
Waratahs flyhalf Will Harrison slotted a penalty from long range a minute later to level the score at 26-26.
But his team mate Swinton strayed offside to allow O'Connor to boot the winner and the Wallaby garnished the victory with a second penalty kick after the siren