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Creamy Au Gratin Potatoes with Green Chilis

Green Chili Au Gratin Potatoes are an elevated version of this comfort food classic. Thinly sliced potatoes, layered with a cheesy cream sauce, baked until golden brown and bubbly. This version with an added kick brings this family favorite up a few notches!

We love the twist to these spicy scalloped potatoes but if you are looking for the basics you can make our versions of the creamiest scalloped potatoes or the cheesy au gratin potatoes.

baking dish with green chili scalloped potatoes

Adding heat to a dish doesn’t need to be intimidating. Chilis not only add a level of spice to your liking but they also add immense flavor. The heat is subtle, however, the twist is anything but.

If you prefer mild chilis, this customizable side dish is all for that. Just choose mild chilis that you like and add them in instead.

I love the fire-roasted green chilis from Trader Joe’s, despite the name being fire-roasted they please even the pickiest eaters because they are subtle. The flavor is a crowd pleaser!

Turn them into a main dish by adding in ground chorizo, shredded chicken, or cubed ham when you are adding the chilis.

This dish is simple to make, using just a few ingredients, and comes together easily. It’s very budget friendly, which makes this doable on any weeknight but is also a perfect side dish to fancier holiday meals. Thanksgiving or Christmas roast turkey, Easter ham, or a Valentine’s Steak dinner!

This side dish is so incredibly delicious. With the perfect combination of texture, taste, and creamy cheesy deliciousness, it can easily become the star of your meal.

scalloped potatoes with heat of green chilis on a plate with ribs

What’s the difference between au gratin potatoes and scalloped potatoes? 

Although they are very similar, potatoes au gratin are made with cheese, whereas scalloped potatoes are not. Creamy scalloped potatoes rely on the thick cream sauce to give it body and that golden brown topping. As well, au gratin potatoes usually have thicker slices of potato.

all the ingredients to make southwest style scalloped potatoes


  • Russet potatoes – The starch level on russets is best for potatoes that soften, but don’t fall apart.
  • Onion flakes – Or fresh minced onion.
  • All-purpose flour
  • Salted butter
  • Whole milk
  • Cheese
  • Salt & pepper
  • Green chilis – Can use canned or homemade. Hatch chilis are great to use, but if you can’t get your hands on them, Anaheim, Poblano and even jalapeno will do.

Best Cheese for Au Gratin Potatoes with Chilis

Cheddar is always a classic and gives a sharp balance to the cream sauce. However, there are others you can use instead or in combination with.

  • Colby Jack Cheese
  • Parmesan
  • Gruyere
  • Pepper Jack

I don’t recommend mozzarella, american cheese, or soft cheeses like blue or goat cheese. Those are all wonderfull cheeses but are not the right texture for the creamy style potatoes you know and love.

How to Make Hatch Chili Potatoes Au Gratin

  • Preheat the oven and prepare the potatoes. Peel and slice them evenly.
  • As you slice, place them in a bowl of cold water to prevent oxidation and remove the starch.
  • Transfer potato slices to a pot, cover with milk and a little water if necessary and bring to a boil. You want the potatoes to cook just enough for a firm bite, but not falling apart.
  • Drain the potatoes and save the milk. Let them cool.
  • In the meantime, melt butter in a small saucepan along with the onion flakes for about 5 minutes. Add the flour and whisk until the flour is toasted and butter is melted (you’re making a roux).
  • Slowly add in the reserved milk while whisking, making sure everything is incorporating as you add the milk. Combine and mix everything well.
  • Continue cooking until the milk mixture begins to thicken. Turn down the heat and add the cheese a bit at a time until it is all melted. Keep the heat low to avoid causing the cheese to curdle.
  • Adjust salt and pepper to taste.
  • Layer the bottom of a 9 x 13 baking dish with 1/3 of the potatoes. Pour 1/3 of the cheese sauce over top, sprinkle chilis overtop in an even layer. Continue this pattern for the remaining top two layers.
  • Bake until cheese is golden brown and bubbly. Allow it to rest for 15 minutes before serving. Enjoy!
close up of finished scalloped creamy potatoes

Tips for making these Southwest Au Gratin Potatoes

  • Cut the potatoes no more than ¼” thick. Ideally ⅛” is the best but unless you own a mandoline then you can make them just as delicious using a knife to cut them to ¼”
  • Be careful to cut the potatoes evenly. Cutting the potatoes the same thickness guarantees even cooking so the potatoes have the same texture throughout. And avoids having some parts of the potatoes that don’t cook all the way through. 
  • I suggest using a glass baking dish or a ceramic baking dish to bake the potatoes au gratin because the potatoes will cook more evenly. There are also instances where the potatoes touching metal may turn black and by using ceramic or glass you’ll avoid that. 
  • When making the cheese sauce, avoid the temptation to use high heat. The sauce can curdle if it’s cooked at too high of a temperature. The sauce will still be edible, but not nearly as creamy a texture. 
  • I’ll usually add the cheese once the heat is turned on low, or I have completely removed the saucepan off the burner. Only place it back on the burner if you see it hasn’t completely melted. 
  • You can use canned green chilis or chilis you roast yourself. I love hatch chilis and usually roast and freeze a bunch (see how to do that here.) 
  • Want to boost the flavor even more? Use a spicy pepper jack cheese instead of cheddar.

While you can use a knife to cut the potatoes, buying a Mandoline will help you get the thinnest cut (⅛”) and guarantee they are all the same thickness. I have used this Mandoline and love it. It has a guard that is very helpful if you want even slices. 

Common questions when making a potato casserole

What makes potatoes turn black? Starch oxidizes when left in the open air turning the potatoes black. You can avoid this by placing the sliced potatoes in water until you are ready to cook them.  

Usually, if you catch it pretty quickly placing the peeled potato into water will eliminate the black color. But if you have peeled your potato the night before and they weren’t completely submerged, the black is probably there to stay, but it’s perfectly safe to eat a potato that has turned black.

Keeping your potatoes in cold water is also a good tip for roasting or baking them. Getting rid of as much starch as possible is helpful in getting very crispy results!

Can I roast my own chilis for this recipe for cheesy potatoes? You can absolutely roast your own. We usually buy a lot of Hatch Chilis from New Mexico when they are in season and roast them and freeze them for later.  (I made roasted salsa using roasted chilis here!) If I have some left I’ll grab about ¾ cup of the ones I roasted myself and froze.

pinterst image showing the potatoes with green chilis

What Kind of chilis can be Roasted?

  • Anaheim
  • New Mexico
  • Jalapeno
  • Poblano
  • Hatch Chili
  • Seranos

How to Roast Chilis for use in Cooking

  1. Rinse and dry chili peppers (I like hatch chilis when I can get them, otherwise I’ll use whatever I can find.)  Place them on a roasting pan.
  2. Turn the oven onto broil. Place the pan in the oven letting them cook until the chilis are blackened on both sides. (Youl’ll want to flip them so both sides cook.
  3. Once blackened, remove them from the oven and place them into a ziplock bag for 20 minutes.
  4. Be sure and have plastic gloves to be able to use if you are using spicy chilis like jalapenos to protect your hands.
  5. Peel away the blackened skins completely.
  6. Cut off the ends, cut in half and using a spoon scrape away the seeds.
  7. Once all the seeds, ends and blackened skins are removed, either use a knife and chop them into bits, or place them in a food processor and pulse them until they are chopped fine.

What to serve with Green Chili Au Gratin Potatoes

serving dish with scalloped potatoes on a buffet


Yield: 8

Au Gratin Potatoes with Green Chilis

Green chili scalloped potatoes

Green Chili Au Gratin Potatoes are an elevated version of this comfort food classic. Thinly sliced potatoes, layered with a cheesy cream sauce, baked until golden brown and bubbly. This version with an added kick brings this family favorite up a few notches!

Prep Time 20 minutes
Cook Time 45 minutes
Total Time 1 hour 5 minutes


  • 3 Pounds Russet Potatoes, peeled and sliced
  • 1 Tablespoon Onion Flakes, (or fresh minced onion works too)
  • 3 tablespoons All Purpose Flour
  • 3 Tablespoons Salted Butter
  • 3 Cups Whole Milk
  • 3 cups Cheddar Cheese
  • Salt and Pepper to taste
  • 2 4 ounce cans  Green Chilis (see notes for using homemade)


  1. Preheat the oven to 375°
  2. Peel the russet potatoes- try finding potatoes of similar circumference to ensure even baking.
  3. Using a mandoline or a sharp chef's knife, cut the potatoes to 1/8-14" disks.
  4. As you are slicing them, place the sliced potatoes into a bowl of cold water to prevent oxidation.
  5. Once all potatoes are peeled, drain the water away and have the water running to rinse away most of the starch from the potatoes.
  6. Place the rinsed potatoes into a pot of water and bring to a boil for 2-3 minutes. Long enough for the potatoes to have cooked, but not so long as they fall apart.
  7. Drain the water away and let it cool while you make the sauce.
  8. In a small saucepan, melt 3 tablespoons of butter along with the onion flakes for about 5 minutes on medium-high.
  9. Add the flour and whisk for 2-3 minutes until the flour is toasted and butter mixed throughout.
  10. Slowly add the milk while whisking to incorporate. Keep adding the milk until it is all combined and mixed well.
  11. Continue cooking until the milk mixture begins to thicken - about 15 minutes. Turn the heat down a little bit and then add the cheese in a handful at a time until its all melted. Resist the urge to up the temperature of the burner to avoid causing the cheese sauce to curdle.
  12. Once it has all mixed taste it, then adjust the sauce with salt and pepper to taste. Then remove the pan from the heat of the burner.
  13. Layer the bottom of a 9X 13 baking dish with potatoes. Then pour 1/3 of the cheese sauce over the top. Sprinkle evenly over the sauce/potatoes half of the green chilis.
  14. Layer 1/2 of the remaining amount of potatoes over next.
  15. Then spoon 1/3 of the sauce over the potatoes.
  16. Finally, layer the last of the potatoes and pour the last of the sauce over the top. Finishing the top with the remaining green chilis.
  17. Bake at 375° for 40-45 minutes until the cheese is golden brown and bubbly.
  18. Let the potatoes rest for 15 minutes before serving.


If using homemade roasted peppers you can sub 3/4 cup over the canned chilis

Nutrition Information:



Serving Size:


Amount Per Serving: Calories: 312Total Fat: 15gSaturated Fat: 9gTrans Fat: 0gUnsaturated Fat: 5gCholesterol: 44mgSodium: 291mgCarbohydrates: 32gFiber: 3gSugar: 5gProtein: 13g

This recipe was calculated using the exact brands and measurements I used to make this recipe. If you are following a strict diet please note changing anything will cause the nutritional info to change. Please calculate your own nutritional information if you want it exact to what you make and use my calculations as a guide only.

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Fall Off The Bone BBQ Ribs Recipe - West Via Midwest

Saturday 2nd of July 2022

[…] are great with honey butter corn but go equally well with Green Chili Au Gratin Potatoes for a full […]


Thursday 11th of March 2021

I really like this recipe! The chilis I used were mild, so it added a lot of flavor instead of heat.

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