The former Manchester United star has been quite critical of Özil in the past but underlined that he has been impressed with the World Cup winner since the Gunners Champions League exit against Monaco in the Last 16.
“We have been quite critical of Özil because we know the talent that he has and since that Monaco game he has been excellent,” Neville said speaking on the Sky Sports 1 show Monday Night Football.
Neville did however reveal that Özil must carry on playing consistently well until the end of the season and into the next league campaign.
“He needs to keep that consistency for the rest of this season and carry it into next season,” he added.
Özil started in the 1-0 loss against Swansea City at the Emirates stadium.
The 26-year-old was awarded a 7.10 rating by Whoscored for his performance against the Swans.
The Gunners have won 16 out of the last 20 games in which Özil has featured since returning from injury.
Özil has won two Vitality Team of the Month and one PFA Fans Player of the Month awards since the turn of the year.
Arsenal are currently joint second in the Premier League with Manchester City on 73 points but have a game in hand over the Citizens.