Step 1: Preheat oven to 400 degrees F (or 350 degrees F for air-convection oven). Set oven rack to second-lowest position.
Step 2: Grease a medium casserole dish (choose one with a tight-fitting lid).
Step 3: Heat oil or butter (or both) in a medium skillet over medium-high heat; add in onion and saute until softened (about 3 minutes). Add in garlic and canned sliced mushrooms; cook for 2-3 minutes. Add in dry rice; cook stirring constantly with a wooden spoon until light browned (about 3-4 minutes, what closely, do not burn!). Transfer into casserole dish.
Step 4: In a bowl whisk condensed soup with water, milk, Parmesan cheese, pepper and salt until smooth. Pour over the rice mix and mix lightly with a spoon. Sprinkle the cheddar cheese over the top.
Step 5: Cover with a tight-fitting lid.
Step 6: Bake covered for 30 minutes.
Step 7: Remove from oven and stir the mixture. Return to oven and continue baking uncovered for another 10-15 minutes or until the rice is soft.
Step 8: After baking, you can mix in more Parmesan cheese if desired. This is best if eaten right away.
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