Preheat oven to 400 degrees. In 13 x 9 casserole dish,layer half of macaroni, half of pepper jack cheese, and 1/3 of sharp cheddar cheese. Layer rest of macaroni,remainder of pepper jack cheese, and top with sharp cheese. Be sure all macaroni is covered with cheese.
In small mixing bowl, beat egg and milk together. Pour mixture over cheese. Fill casserole dish the rest of the way with water. Pepper liberally on top of cheese. Cook in oven for 1 hour.