Peggy’s Casserole is an Instant Pot take on a potato and smoked sausage dish with a creamy sauce and cheddar on top. You’re going to love how the Instant Pot can help take a recipe that usually takes oven an hour to bake in the oven and make it in 30 minutes.

Instant Pot Peggy’s Casserole
Potatoes and smoked sausage with a creamy, cheesy sauce is something that your family will love for dinner this week! My family scraped the pot clean. This recipe uses easy to find ingredients (you may even have everything at home!).
Ingredients/Substitution Ideas
- Russet potatoes–or red or yellow potatoes
- Butter
- Smoked sausage–or kielbasa or cubes of ham
- Flour
- Chicken broth–or water and Better than Bouillon chicken base
- Milk
- Garlic powder
- Kosher salt
- Black pepper
- Sharp cheddar cheese–or another kind of cheese like colby jack
- Sour cream–or plain yogurt
Steps
Pour 1 ½ cups of water into bottom of Instant Pot. Add sliced potatoes into steamer basket*. Drop the steamer basket into the Instant Pot.

Cover Instant Pot and secure the lid. Make sure valve is set to sealing. Set the manual/pressure cook button to 2 minutes for al dente potatoes or 3 minutes for soft potatoes. When time is up move valve to venting and remove the lid. Set aside steamer basket for later. Dump out the water in bottom of pot and dry out the pot.

Turn Instant Pot to saute setting. When display says HOT add in 1 Tbsp of the butter. Add in the smoked sausage and brown for about 2 minutes on each side.

Add in the remaining butter and let melt.

Sprinkle in the flour, a tablespoon at a time and whisk well. Add chicken broth, whisk until smooth. Stir in the milk, garlic powder, salt and pepper. Bring the mixture to a simmer and stir until mixture has thickened.

Turn off Instant Pot. Stir in a half cup of shredded cheddar and sour cream. Fold in the potatoes. Salt and pepper to taste.

Sprinkle the remaining cheese on top. Use an air fryer lid to melt the cheese (350 degrees for 2 minutes) or simply place normal lid on top and let melt on the Keep Warm setting for 3-4 minutes.

Notes/Tips
- Serve with some green veggies like asparagus, green beans or broccoli.
- Variation: Add in a bag of frozen broccoli on top of the potatoes in the steamer basket.
- I used my Duo Crisp 6 quart Instant Pot*.
- I love using my silicone steamer basket* for this recipe.
- I love using my little whisk* for this recipe to whisk in the flour.
- To make this recipe gluten free use a cornstarch slurry instead of flour. Use 3 Tbsp of cornstarch.
- Store leftovers in an airtight container* in the refrigerator for up to 5 days or in the freezer for up to 3 months.
- Other recipes you can make with sour cream Instant Pot Sour Cream Noodle Bake and Instant Pot Sour Cream Chili Bake.
- Recipe adapted from Everyday Dishes.

More Instant Pot Potato Recipes…
Instant Pot Wedding Potatoes
Homemade cheesy, saucy potatoes topped with crispy, crunchy BBQ potato chips.
Instant Pot Lighthouse Inn Potatoes
Cubed potatoes in a creamy sauce with a crispy, cheesy, satisfying topping.
Instant Pot Chantilly Potatoes
Creamy mashed potatoes with a cheesy, golden brown top. Decadent and delicious!
Did you know you can filter the recipes on my website to search by meat type, IP or Crockpot, low carb, gluten free, etc.? Use the filter to find exactly what you are looking for.


Peggy’s Casserole (Instant Pot)
- Prep Time: 15 minutes
- Cook Time: 2 minutes
- Total Time: 17 minutes
- Yield: 6 servings 1x
Description
Peggy’s Casserole is an Instant Pot take on a potato and smoked sausage dish with a creamy sauce and cheddar on top. You’re going to love how the Instant Pot can help take a recipe that usually takes oven an hour to bake in the oven and make it in 30 minutes.
Ingredients
- 1 3/4 pounds Russet potatoes, peeled and sliced into quarter inch slices (about 6 medium potatoes)
- 3 Tbsp butter
- 1 (12 oz) package smoked sausage, sliced in half lengthwise and then sliced into half inch half moon slices
- 1/4 cup all purpose flour
- 1 1/2 cups chicken broth
- 1/4 cup milk
- 1/2 tsp garlic powder
- 1/4 tsp kosher salt
- 1/4 tsp black pepper
- 1 cup shredded sharp cheddar cheese, divided
- 1/2 cup sour cream
Instructions
- Pour 1 ½ cups of water into bottom of Instant Pot. Add sliced potatoes into steamer basket. Drop the steamer basket into the Instant Pot.
- Cover Instant Pot and secure the lid. Make sure valve is set to sealing. Set the manual/pressure cook button to 2 minutes for al dente potatoes or 3 minutes for soft potatoes. When time is up move valve to venting and remove the lid. Set aside steamer basket for later. Dump out the water in bottom of pot and dry out the pot.
- Turn Instant Pot to saute setting. When display says HOT add in 1 Tbsp of the butter. Add in the smoked sausage and brown for about 2 minutes on each side.
- Add in the remaining butter and let melt. Sprinkle in the flour, a tablespoon at a time and whisk well. Add chicken broth, whisk until smooth. Stir in the milk, garlic powder, salt and pepper. Bring the mixture to a simmer and stir until mixture has thickened.
- Turn off Instant Pot. Stir in a half cup of shredded cheddar and sour cream. Fold in the potatoes. Salt and pepper to taste.
- Sprinkle the remaining cheese on top. Use an air fryer lid to melt the cheese (350 degrees for 2 minutes) or simply place normal lid on top and let melt on the Keep Warm setting for 3-4 minutes.
Notes
Variation: Add in a bag of frozen broccoli on top of the potatoes in the steamer basket.
- Category: Sausage
- Method: Instant Pot

*Karen Petersen is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.
This has come to be one of my family’s favorites. I always double the recipe, so we have leftovers. It’s great for rainy PNW days where you want a hearty comfort food.
★★★★★
Yes for sure…a great rainy day recipe!
This was soooo good!! I loved the flavor and creaminess of this dish!! Will definitely be making this again!!!
★★★★★
Thanks so much for the 5 stars Sherry!
My mother made scalloped potatoes and pork chops in the pressure cooker that were to die for! She first browned the chops in the pressure cooker, took them out and added the sliced potatoes which she dotted with butter and flour, added whole milk, and then put her browned chops on top. They were very tender, and the potatoes were flavored with the pork drippings. Can this be done in the Instant Pot, and if so how long should they cook? Thanks.
★★★★★
can you make this in the crockpot and if so how do you do it.
I too, make this in my slow cooker. I spray my crock or use a liner. I CAREFULLY cut the potatoes very thin on a mandolin. I use evaporated milk because it’s more stable in the slow cooker and I melt the butter and mix all the ingredients together in a bowl. Put potatoes in a layer in the crock as even as you can. pour over some of the liquid, sprinkle some freshly shredded cheese. Repeat until you use all the potatoes, top with any remaining mixture. I always cook on low for about 3.5 hours, slather with more shredded cheese. put the lid back on. in about 1/2 hour the cheese should be melted & lovely. I often brown some sausage or cubed ham & add some to each layer. I tried bacon once and the flavor was great but it got too soggy for me.
★★★★★