O'Keefe was snapped up by Gordon Lee at First Division Everton for a £25,000 fee. He received a red card in the Merseyside derby, after a late challenge on Liverpool's Ronnie Whelan. He played in the derby again on 24 January 1981, in an FA Cup Third Round clash, and unwittingly set up Imre Varadi for the "Toffees" second goal of a 2–1 win. He went on to score the only goal of the Fourth Round Replay against Southampton at Goodison Park. However Manchester City knocked Everton out at the quarter-final stage, whilst O'Keefe broke his leg in a game against Manchester United.