Heat oven to 350. Spray 11x7 glass baking dish with nonstick cooking spray.
In medium bowl, combine potatoes, 1 1/2 cups of the cheese the sour cream, Itailian seasoining, peppered seasoned salt and soup. Mix well. Spread in sprayed baking dish. Cover tightly with foil. Bake at 350 for 30 minutes.
Remove from oven. Uncover; arrange meatballs in rows over potatoes, pressing in slightly. Sprinkle with remaining 1/2 cup cueese.
Return tooven; bake uncovered an additional 20 to 30 minutes or until golden brown and hot in center.