Preheat your oven to 375°F and lightly grease a 9x13-inch baking dish.
Lay the chicken breasts in the dish in a single layer.
In a bowl, mix softened cream cheese, salsa, fajita seasoning, salt, and pepper until smooth.
Spread the cream cheese mixture evenly over each chicken breast.
Top with diced bell peppers and optional red onion or jalapeños.
Sprinkle shredded cheddar cheese generously over the top.
Bake for 25–30 minutes or until the chicken is fully cooked and the cheese is golden and bubbly.
Let rest for 5 minutes before serving your cheesy baked fajita chicken.