In Dutch oven or 12-inch nonstick skillet, cook sausage over medium-high heat, stirring frequently, until no longer pink. Stir in pepperoni; cook 2 minutes. Drain.
Stir in pizza sauce and water. Add potatoes; stir to mix. Reduce heat to medium; cover and cook 10 to 15 minutes, stirring occasionally, until potatoes are tender.
Sprinkle cheese over top. Remove from heat; cover and let stand 5 minutes or until cheese is melted.