Preheat the oven to 375°F (190°C). Lightly grease a baking dish or line a baking sheet with parchment paper.
Wash and dry the banana peppers. Slice them lengthwise and carefully remove the seeds and membranes.
Arrange the pepper halves cut-side up in the prepared baking dish.
Heat the olive oil in a skillet over medium-high heat. Add the Italian sausage and cook for 7–9 minutes, breaking it into small crumbles.
Add the diced onion and cook for 3–4 minutes, until softened.
Add the minced garlic and cook for about 30–60 seconds, until fragrant.
Reduce the heat to low. Add the softened cream cheese and stir until smooth and combined.
Stir in the Parmesan, Italian seasoning, parsley, black pepper, and optional red pepper flakes. Taste and adjust the seasoning if needed.
Spoon the sausage mixture evenly into the banana pepper halves.
Sprinkle the shredded mozzarella over the top of each pepper.
Bake uncovered for 18–25 minutes, until the peppers are tender and the cheese is melted and bubbling.
For a golden cheese topping, broil for 1–2 minutes, watching closely.
Let the peppers rest for about 5 minutes before serving.