Cook the Pasta: Preheat your oven to 375°F (190°C). Bring a large pot of salted water to a boil and cook the penne pasta according to package instructions, until al dente. Drain and set aside.

Prepare the Pepperoni and Sauce: In a large skillet, heat olive oil over medium heat. Add the sliced pepperoni and cook for 2-3 minutes until slightly crispy. Remove about 1/4 of the pepperoni slices and set aside for topping later. If you want to add onion, cook the diced onion in the same pan for 2-3 minutes until softened.

Combine the Sauce: Add the marinara sauce, Italian seasoning, and garlic powder to the skillet with the remaining pepperoni. Stir to combine and bring to a simmer. Let the sauce simmer for 5 minutes.

Assemble the Casserole: In a large mixing bowl, combine the cooked pasta, pepperoni sauce mixture, and half of the shredded mozzarella. Stir to combine everything evenly.

Bake the Casserole: Pour the pasta and sauce mixture into a greased 9×13-inch baking dish. Top with the remaining mozzarella cheese and the grated Parmesan cheese.

Bake: Cover the casserole with aluminum foil and bake for 15 minutes. Then, uncover the casserole and bake for an additional 10 minutes, or until the cheese is melted and bubbly.

Serve: Remove the casserole from the oven and top with the reserved crispy pepperoni slices. Garnish with fresh basil if desired. Serve warm and enjoy!