Preheat your oven to 375°F (190°C). Lightly grease a 9x13-inch baking dish with cooking spray.
In a large skillet over medium heat, heat the olive oil. Add the sliced onions and sauté until softened and golden brown, about 5-7 minutes.
Add the sliced kielbasa to the skillet and cook for another 4-5 minutes, until lightly browned. Remove from heat and set aside.
In a large bowl, whisk together sour cream, cream cheese, milk, garlic powder, black pepper, and paprika until smooth and well combined.
Place the frozen pierogies in the prepared baking dish. Pour the cream sauce over them and gently toss to coat evenly.
Add the cooked onions and kielbasa on top of the pierogies and mix slightly to distribute throughout the dish.
Sprinkle shredded cheddar cheese evenly over the top of the casserole.
Cover the dish tightly with aluminum foil and bake for 20 minutes.
Remove foil and bake for another 10-15 minutes, until the cheese is melted, bubbly, and starting to turn golden.
Let the kielbasa and pierogi bake rest for 5 minutes before serving. Garnish with chopped fresh parsley and enjoy!
