This post may contain affiliate links. Please see our disclosure policy.
When your pellet grill’s already fired up for the main course, why not throw on a side dish that’ll steal the show? These smoked scalloped potatoes are loaded with bacon, jalapeños, sharp cheddar, and cream – all kissed with that signature wood-fired flavor that makes everything better.
I’ve always said that a pellet smoker is basically just an oven with flavor. So when you’ve got that grill running, don’t be scared to maximize your smoke time with an incredible side dish.
These aren’t your grandma’s plain scalloped potatoes. We’re talking layers of hand-cut potatoes (none of that mandolin nonsense), a rich jalapeño cream sauce, and a crispy bacon-cheese crust that’ll have everyone coming back for seconds.
Why These Smoked Scalloped Potatoes Are Different
The secret to next-level scalloped potatoes isn’t fancy technique – it’s all about building flavor and getting the right texture. Here’s what makes this recipe stand out:
- Hand-cut potatoes create better texture – I know it sounds crazy, but cutting your potatoes by hand instead of using a mandolin actually gives you varying thicknesses. This means you get different textures in the same dish – some potatoes are more tender, others have a bit of bite, and nothing tastes like it came out of a box.
- Homemade jalapeño cream sauce – We’re making a quick béchamel with sautéed jalapeños and onions, then loading it with sharp cheddar. The result? A creamy, slightly spicy sauce that’s better than cream of whatever canned soup.
- Smoky flavor – Cooking these at 325°F for about two hours gives the potatoes time to soak up that smoke flavor from the pellet grill while the cream sauce works its magic.
Step-by-Step Instructions
Step 1: Prep Your Potatoes the Right Way
Start by washing your potatoes thoroughly. I like leaving the skins on – they add texture and color.
However, I do always use a vegetable peeler and remove only three strips of the skin around each potato. I find that this helps to create a flatter, more stable surface when cutting the potatoes into thin slices. Just roll the potatoes around until you find which strip keeps the potatoes the most steady without rolling.
Then slice your potatoes into rounds, slightly smaller than 1/4″ thick, but thicker than 1/8″. Don’t stress about making them perfectly uniform – some will be just a hair thicker, some thinner, and that will give you great texture in the finished scalloped potatoes.
Once sliced, throw the potatoes in a bowl of cold water, and then quickly rinse the slices under running cold water to remove excess starch. Then lay them out on clean tea towels and pat them completely dry. This is crucial – you want to remove as much moisture as possible. The last thing you want is soupy scalloped potatoes.
Step 2: Make the Jalapeño Cream Sauce
While your potatoes are drying, start on the cream sauce.
In a skillet over medium heat, melt a few tablespoons of butter. Add the diced jalapeño and onion. You’re not looking to add color here – just sweat them down until they’re tender, about 3-4 minutes. Season with about a teaspoon of salt and half a teaspoon of fresh cracked black pepper.
Add 2 tablespoons of flour to the pan and mix it in well. Cook this roux for about 60 to 90 seconds, stirring constantly. This cooks off that raw flour taste and gets you ready for a silky sauce.
Pour in chicken stock and heavy cream. Whisk everything together, making sure to scrape the bottom of the pan to get all those flavorful bits from the jalapeños and onions.
Let this come to a simmer. You want the consistency on the thinner side – don’t worry if it seems too thin. When you add the cheese, it’ll thicken up perfectly.
*Chef’s Tip: If your sauce is too thick before adding the cheese, you’re going to end up with a paste instead of a creamy sauce. Keep it loose!
Step 3: Add the Cheese
Take about half of your grated cheddar (eyeball it – you’ll use the rest on top later) and stir it into your cream sauce. Keep the heat on low and stir until the cheese melts completely, creating a smooth, creamy sauce.
Taste it now – the jalapeño and onion should give it a nice kick without being overwhelming. Season with more salt and pepper, if needed.
Step 4: Arrange Your Potatoes
Lightly grease your casserole dish with butter – just a very thin coat on the bottom and sides.
Now comes the fun part. Start arranging your dried potato slices standing up and slightly diagonally in the bottom of the casserole dish. Don’t worry about making it perfect – as you add more potato slices, you can stand them up at more of a 90 degree angle to make room for more potatoes, filling in any gaps as you go.
The goal is to have as many potato slices as possible exposed to the delicious cream sauce on top, and to have the potatoes placed evenly in the dish so that they bake evenly.
Step 5: Add the Sauce and Protect Your Dish
Pour your jalapeño cream sauce right over the arranged potatoes. Use a spatula to gently work the sauce into all the nooks and crannies between the potato slices.
*Pro Tip – Place a piece of aluminum foil on the bottom of your casserole dish before placing it on the smoker. Since the dish is porous and you’re smoking it on the pellet grill, this protects the bottom from getting all grimy and difficult to clean. The top of the enameled cast iron dish will clean up easily, but that foil on the bottom is a game-changer.
Step 6: Smoke the Scalloped Potatoes
Place your casserole dish on your pellet grill or smoker set to 325°F.
Smoke for about 90 minutes to 1 hour and 45 minutes. You want the potatoes to be almost done but not quite.
*NOTE – The cooking times may vary based on the dimensions of your casserole dish, what type of smoker you’re using, etc.
After the initial smoking time, sprinkle the remaining grated cheddar cheese in an even layer on top of the potatoes. Then add the cooked and crumbled bacon, and a few jalapeno slices if you want some extra heat.
Return the dish to the smoker for another 15-30 minutes until the cheese is melted and bubbly, the bacon is crispy, and the potatoes are fork-tender.
Total cook time should be around 2 hours at 325°F.
Step 7: Rest and Serve
This is important: let the potatoes rest for at least 20 minutes after pulling them off the smoker. They’re piping hot and need time to set up. The sauce will thicken as it cools slightly, making it easier to serve.
Garnish with sliced green onions for color and a fresh bite.
Serving Suggestions
These smoked scalloped potatoes are the perfect side for:
- Smoked prime rib
- Grilled steaks
- Rotisserie chicken
- Smoked pork chops
- Holiday dinners (Thanksgiving, Christmas, Easter)
The rich, creamy texture pairs beautifully with any hearty protein, and the smoke flavor ties everything together for a complete outdoor cooking experience.
Storage and Reheating
Store leftover scalloped potatoes in an airtight container in the refrigerator for up to 3-4 days.
To reheat: Cover with foil and warm in a 325°F oven for 20-25 minutes, or microwave individual portions in 1-minute intervals until heated through.
Recipe Notes
Potato selection: Russet potatoes work best for scalloped potatoes because of their starchy texture. Yukon golds are a good second choice if you prefer a creamier, buttery texture. For Yukon golds, you may need to shorten the cooking time.
Spice level: Control the heat by adjusting the amount of jalapeño and whether you remove the seeds. For mild, use half a jalapeño with seeds removed. For spicy, use a whole jalapeño with some seeds left in.
Cheese options: Sharp cheddar gives the best flavor, but you can also use a combination of cheddar and Monterey Jack, or add some smoked Gouda for extra smoke flavor.
Frequently Asked Questions
Absolutely! Bake at 325°F for about 90 minutes, following the same steps. You’ll lose the smoke flavor, but they’ll still be delicious. For a touch of smoke flavor in the oven, use smoked cheddar or add a teaspoon of smoked paprika to the cream sauce.
No! In fact, hand-cutting is actually better for this recipe. The varying thicknesses create different textures – some tender, some with more bite – which makes the dish more interesting. Just aim for slightly smaller than 1/4″ thick slices.
Two main reasons: (1) You didn’t dry the potato slices thoroughly after rinsing, or (2) Your cream sauce was too thin. Make sure to pat the potatoes completely dry with tea towels and don’t add extra liquid beyond what’s in the recipe.
The potatoes are done when they’re fork-tender – a fork should slide through them easily without resistance, but they shouldn’t be mushy or falling apart. They should have a baked potato texture, not a mashed potato texture.
Smoked Scalloped Potatoes
Ingredients
- 5 medium russet potatoes, washed (skins left on)
- 16 oz sharp cheddar cheese, grated and divided
- 3-4 strips bacon, crispy cooked and chopped
- 1 tablespoon butter, for greasing the dish
- 2 tablespoons butter
- 1 jalapeño, diced (seeds removed for less heat)
- ½ medium onion, diced
- 2 teaspoons kosher salt
- 1 teaspoon fresh cracked black pepper
- 2 tablespoons all-purpose flour
- 1 cup chicken stock
- 1 cup heavy cream
- 2 green onions, sliced for garnish
Instructions
- Heat the pellet grill or smoker to 325℉ with your choice of wood or pellets.
- Peel and slice the potatoes – Use a vegetable peeler to peel 3 strips of skin off each washed potato, spacing out the peels. Then position the potatoes on a cutting board where they are the most stable, and slice into rounds slightly less than ¼" thick. Add the potato slices to a large bowl of cold water.
- Rinse and dry the potato slices – Rinse the potato slices under cold running water for about 1 minute to remove excess starch. Then spread the slices out on a clean tea towel in a single layer. Roll up the towel, and allow the potatoes to dry while you make the cream sauce.
- Sauté the vegetables – In a skillet over medium heat, melt 2 tablespoons of butter. When melted, add the diced jalapeño and onion. Sauté about 3-4 minutes to soften and get a small bit of color on the vegetables. Season with salt and black pepper.
- Make the roux – To the same skillet with the sautéed jalapeños and onions, add 2 tablespoons of flour and mix it in well. Cook this roux for about 60 to 90 seconds, stirring constantly.
- Finish the cream sauce – Pour the chicken stock and heavy cream in the skillet. Whisk everything together, making sure to scrape the bottom of the pan to get all those flavorful bits from the jalapeños and onions. Let this come to a soft boil, stirring constantly. *The sauce won't come up to its full thickening power until it reaches a soft boil. Once it reaches a soft boil, reduce the heat to low, and add about 75% of the grated cheddar. Stir until the cheese melts completely, creating a smooth, creamy sauce. Turn off the heat while you arrange the potatoes.
- Arrange the potato slices – Lightly grease your casserole dish with about 1 tablespoon butter. Then arrange the dried potato slices standing up and slightly diagonally in the bottom of the casserole dish. *Don’t worry about making it perfect – as you add more potato slices, you can stand them up at more of a 90 degree angle to make room for more potatoes, filling in any gaps as you go.
- Pour on the cream sauce and smoke – Pour the jalapeño cream sauce right over the arranged potatoes. Use a spatula to gently work the sauce into all the nooks and crannies between the potato slices. Then place the casserole dish on the pellet grill or smoker, and smoke at 325℉ for about 1 hour 45 minutes – you want the potatoes to be almost done, but not quite.
- Add more cheese and finish smoking – Sprinkle the remaining grated cheddar cheese in an even layer on top of the potatoes. Then add the cooked and crumbled bacon, and a few jalapeno slices if you want some extra heat. Return the dish to the smoker for another 15-30 minutes until the cheese is melted and bubbly, the bacon is crispy, and the potatoes are fork-tender. *See notes.
- Rest and serve – Remove the potatoes from the smoker, and allow to cool about 20-25 minutes before serving. The garnish with sliced green onions. The cooling time is important, as your sauce will thicken as it cools.
Notes
- Protecting your casserole dish on the smoker – Place a piece of aluminum foil on the bottom of your casserole dish before placing it on the smoker. Since the dish is porous and you’re smoking it on the pellet grill, this protects the bottom from getting all grimy and difficult to clean. The top of the enameled cast iron dish will clean up easily, but that foil on the bottom is a game-changer.
- Total cooking time – The total cooking time should be about 2 hours at 325°F. However, cooking time can vary based on the size of your casserole dish, what grill you have, etc.
- Cheese options – Sharp cheddar gives the best flavor, but you can also use a combination of cheddar and Monterey Jack, or add some smoked Gouda for extra smoke flavor.
Nutrition
Nutrition information is automatically calculated, so should only be used as an approximation.
Pinterest user? Do us a favor and PIN this to your board for smoker side dish recipes. This is a GREAT way to support us!
