Preheat the air fryer to 390°F (200°C) for 3–5 minutes.
A hot basket helps the potatoes crisp.
Prep the potatoes and veggies. Wash and cube the potatoes into even 1-inch pieces so they cook at the same rate. Slice the onion and pepper.
Slice the sausage. Cut into 1/2-inch rounds. If using fresh Italian sausage, par-cook or use thinner slices to ensure it cooks through.
Toss with oil and seasonings. In a large bowl, combine potatoes, onion, and pepper with olive oil, garlic powder, smoked paprika, Italian seasoning, salt, and pepper.
Mix until everything is well coated.
Cook the potatoes first. Add the seasoned potatoes and veggies to the air fryer basket in a mostly single layer. Cook for 10–12 minutes, shaking the basket halfway.
Add the sausage. Once the potatoes start to brown, add the sliced sausage on top. Cook for another 8–10 minutes, shaking once or twice, until the potatoes are tender and edges are crisp, and the sausage is browned.
Check doneness. Potatoes should be fork-tender and golden.
Sausage should be nicely caramelized. If needed, cook 2–3 minutes more.
Finish and serve. Sprinkle with parsley, a squeeze of lemon, or Parmesan. Taste and adjust salt and pepper.
Serve hot.