Heat oven to 375°F. Line 15x10x1-inch pan with foil; grease foil. In large bowl, mix meatball ingredients until well blended. Shape into 36 (1 1/4-inch) meatballs. Place in pan.
Bake 25 to 30 minutes or until thoroughly cooked and no longer pink in center.
In 4-quart saucepan, mix sauce ingredients. Cook over medium heat 2 to 3 minutes, stirring constantly, until thickened.
Add meatballs to sauce; stir to coat. Cook over medium-low heat 5 to 7 minutes, stirring occasionally, until hot.