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Preheat oven to 350°. In a large skillet, cook sausage over medium heat until no longer pink, breaking it into crumbles; drain and set aside. Combine soup, milk, onion, salt and pepper.
In a greased 2-qt. baking dish, layer half the potatoes, soup mixture and sausage. Repeat layers.
Cover and bake until potatoes are tender, 60-65 minutes. Sprinkle with cheese; bake, uncovered, until cheese is melted, 2-3 minutes. If desired, garnish with parsley.