Cook sausage in a large skillet over medium-high heat, stirring until it crumbles and is no longer pink. Drain and return to skillet.
Add chopped onion and bell pepper to sausage in skillet, and sauté over medium-high heat 5 minutes or until vegetables are tender. Stir in tomatoes and green chiles; reduce heat and simmer 10 minutes.
Layer half each of tortilla pieces, sausage mixture, and cheese in a lightly greased 13- x 9-inch baking dish. Repeat layers.
Whisk together eggs, milk, salt, and pepper; pour over layers in baking dish. Cover and chill up to 8 hours, if desired.
Bake, lightly covered with aluminum foil, at 350° for 30 minutes or until golden and bubbly.