This Christmas Lasagna is packed with so much flavor thanks to the Italian sausage, bell peppers, basil, and the blend of 3 kinds of cheese! It's my family's favorite sausage lasagna, and I know it will be your family's, too!
Move oven rack to middle position and preheat oven to 350 degrees F. Boil the lasagna as per the package instructions, drain and set aside.
If you’re making the Christmas tree design on top of your lasagna as I did, then reserve 1/3 of each bell pepper. Dice the remaining parts of the bell peppers, and set aside.
In a large, deep skillet over medium-high heat brown the sausage for 2 minutes, breaking chunks apart with the back of a wooden spoon. Add in the diced bell peppers, onions, and garlic powder and cook until the sausage is browned and cooked through, about 5-7 minutes.
While the sausage is cooking, use a mixer to beat the cream cheese for 1 minute.
With the mixer on low, add the milk in a steady stream to combine.
Increase mixer speed to medium and continue to mix until light and creamy and there are no more lumps, about 2-3 minutes.
In a medium-sized bowl, combine the mozzarella and Parmesan cheese and lightly toss with your fingers. Reserve 1-1/2 cups (half of the cheese), and set aside. Add the remaining cheese to cream cheese mixture and mix until the cheese is evenly distributed.
Drain the fat from the sausage mixture, and stir in the sauce, water, and basil until combined. Spread ⅓ of the sausage and sauce mixture into the bottom of a 9x13-inch baking pan; layer with 3 noodles and half the cream cheese mixture. Add another layer of 3 noodles, then half the remaining sausage mixture, followed by 3 more noodles. Layer the remaining cream cheese mixture, the last 3 noodles, sausage mixture and reserved 1½ cups of cheese. Use the reserved bell peppers to make your Christmas tree design.
Cover the lasagna with foil and bake for 45 minutes. Remove the foil and bake for an additional 15 minutes. Let the lasagna cool for 15 minutes before serving. Garnish with chopped basil.