Preheat your oven to 400°F (200°C). Grease a large baking dish or line it with parchment paper for easy cleanup.
In a large bowl, combine the halved baby potatoes, sliced smoked sausage, olive oil, ranch seasoning mix, garlic powder, onion powder, salt, and pepper. Toss everything together until the potatoes and sausage are well coated.
Spread the mixture evenly in the prepared baking dish. Bake in the preheated oven for 30-35 minutes, or until the potatoes are tender and golden brown, stirring halfway through for even cooking.
Remove the dish from the oven and sprinkle the shredded cheddar cheese on top. Return to the oven and bake for an additional 5-7 minutes, or until the cheese is melted and bubbly.
Once done, remove from the oven and let it cool for a few minutes. Drizzle sour cream over the top and garnish with chopped parsley if desired.