Step 1: Preheat and Prepare

Preheat your oven to 400°F (200°C). Generously butter a 9×13-inch baking dish or a similar 3-quart casserole dish.

Peel your potatoes and slice them into uniform 1/8-inch thick rounds using a mandoline or a sharp knife. To prevent the sliced potatoes from browning while you work, place them in a large bowl of cold water. When you’re ready to assemble, drain them and pat them thoroughly dry.

Step 2: Make the Creamy Cheese Sauce

In a medium saucepan over medium heat, melt the 4 tablespoons of butter. Once the butter is melted, whisk in the 1/4 cup of all-purpose flour. Cook, whisking constantly, for about 1 minute. This creates a “roux,” which will thicken our sauce.

While continuing to whisk, slowly pour in the warmed milk and heavy cream. It’s important to add the liquid slowly and whisk constantly to prevent lumps from forming. Continue to cook, whisking frequently, until the sauce comes to a gentle simmer and has thickened enough to coat the back of a spoon (about 5-7 minutes).

Remove the saucepan from the heat. Stir in the salt, pepper, nutmeg, and paprika. Gradually add 2 cups of the grated cheese, stirring until the cheese is completely melted and the sauce is smooth. Set aside.

Step 3: Layer the Casserole

Arrange about one-third of the dried potato slices in an overlapping layer on the bottom of the prepared baking dish. Sprinkle with about half of the thinly sliced onions.

Repeat with another one-third of the potatoes and the remaining onions. Top with the final one-third of the potato slices, arranging them in an attractive pattern if you like.

Step 4: Pour the Sauce and Bake

Carefully and evenly pour the prepared cheese sauce over the layered potatoes. Gently press down on the potatoes with a spatula to ensure they are submerged in the sauce.

Sprinkle the remaining 1/2 cup of grated cheese evenly over the top.

Step 5: The Two-Stage Bake

Cover the baking dish tightly with aluminum foil. Bake for 45 minutes. This traps the steam and ensures the potatoes cook through evenly.

After 45 minutes, carefully remove the foil. Return the dish to the oven and continue to bake, uncovered, for another 25-30 minutes, or until the top is deeply golden brown and bubbly, and the potatoes are tender. You can test for doneness by inserting a sharp knife into the center of the casserole—it should slide in with little resistance.

Step 6: The Crucial Rest

Remove the scalloped potatoes from the oven and let them rest for at least 15-20 minutes before serving. This is a critical step! It allows the sauce to cool slightly and set up. If you cut into it immediately, the sauce will be runny. Resting ensures a thick, creamy consistency.