Heat oven to 400°F. In large bowl, mix beef, onion, bread crumbs, milk, salt, pepper and egg. Shape mixture into thirty 1-inch meatballs. In ungreased 13x9-inch pan, place meatballs.
Bake uncovered about 15 minutes or until meatballs are no longer pink in center and thermometer inserted in center reads 160°F.
In 2-quart saucepan, mix meatballs and sweet-and-sour sauce. Heat to boiling over medium-high heat, stirring occasionally; reduce heat. Cover and simmer about 15 minutes, stirring occasionally, until sauce and meatballs are hot. Serve hot with toothpicks.