In a large skillet over medium heat, brown ground beef with the onion and peppers. Drain excess liquid and reserve. Add spaghetti seasoning to browned meat and blend. Add pepperoni and mushrooms and blend again.
Meanwhile prepare pasta. Drain and add to ground beef mixture in a 9 x 13 inch baking dish. Add tomato sauce and water; stir to combine. Add most of the cheese and stir again. Sprinkle remaining cheese on top.