Preheat and prepare: Preheat oven to 375°F (190°C). Lightly grease a 9x13 inch baking dish.
Caramelize onions: Heat olive oil in large skillet over medium heat. Add sliced onion and sauté 5-7 minutes until softened and golden brown.
Brown kielbasa: Add sliced kielbasa to skillet and cook 4-5 minutes until lightly browned. Remove from heat.
Make sauce: In large bowl, whisk together sour cream, cream cheese, milk, garlic powder, black pepper, and paprika until smooth.
Assemble: Place frozen pierogies in prepared baking dish. Pour sauce over and toss to coat. Add cooked onions and kielbasa on top, mixing slightly to distribute.
Add cheese: Sprinkle shredded cheddar cheese evenly over top.
Bake covered: Cover dish with foil and bake 20 minutes.
Finish baking: Remove foil and bake another 10-15 minutes until cheese is melted and bubbly.
Serve: Let rest 5 minutes. Garnish with chopped parsley before serving.
