Heat the olive oil in a large, deep pot over medium heat. Add the sausage and cook for 4-5 minutes, breaking up the meat with a spatula, until browned.
Add the onion, green bell pepper and mushrooms to the pot. Cook for 5-6 minutes or until vegetables are tender.
Add 1/2 cup of the pepperoni, olives and the garlic, and cook for 1 minute.
Add the marinara sauce, water, salt, pepper and pasta to the pot and bring to a simmer.
Cover the pot and cook over low heat for 12-14 minutes or until pasta is tender.
While the pasta is simmering, preheat the oven to 400 degrees F.
Coat a 3 quart baking dish with cooking spray.
After the pasta is finished cooking, pour the mixture into the baking dish.
Sprinkle the cheese over the top and arrange the remaining 1/4 cup of pepperoni on the cheese.
Bake for 10-15 minutes or until cheese is melted. Sprinkle with parsley and serve.