Preheat oven to 350°F

Chop onion

Cook spaghetti according to directions

Drain spaghetti

Preheat olive oil in skillet over medium-high heat

Cook Italian sausage and onion in preheated skillet until meat is no longer pink

Drain meat and onion mixture

Add mushrooms, tomato sauce, tomato paste, sugar, garlic powder, and dried oregano to meat mixture

Stir pasta into meat sauce

Spray casserole dish with cooking spray

Transfer pasta and meat mixture into the casserole dish

Top mixture with mozzarella cheese, pepperoni, and parmesan cheese

Cover the casserole dish with foil

Bake for 20 minutes in preheated oven

Remove foil

Bake 15 minutes more

Serve