Preheat your oven to 375°F (190°C).
In a large mixing bowl, combine the olive oil, chili powder, paprika, cumin, garlic powder, onion powder, salt, and black pepper. Mix until well combined.
Add the chicken breasts to the bowl and coat them evenly with the spice mixture.
Place the seasoned chicken breasts in a baking dish.
Scatter the sliced bell peppers and onion over the chicken, spreading them evenly.
Pour the salsa over the chicken and veggies, ensuring they are well-covered.
Sprinkle the shredded cheddar cheese on top of the salsa.
Cover the baking dish with aluminum foil and bake for 20 minutes.
After 20 minutes, remove the foil and bake for an additional 10 minutes, or until the chicken is cooked through (internal temperature should reach 165°F/75°C) and the cheese is bubbly and slightly golden.
Let it rest for a few minutes before serving. Garnish with fresh cilantro if desired.