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Heat a large skillet over medium-high heat. Add the sausage and cook, breaking it into small crumbles with a spoon, for 6–8 minutes until browned throughout with no pink remaining. Add the onion and bell pepper and cook, stirring occasionally, until softened and the onion is translucent, about 4–5 minutes. Drain off any excess fat and set the skillet aside.
Grease a 9x13-inch baking dish. Spread the bread cubes in an even layer across the bottom of the dish. Scatter the sausage and vegetable mixture evenly over the bread, then sprinkle 1 1/2 cups of the cheddar cheese over the top.
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