Preheat your oven to 400 degrees Fahrenheit.
In a cast-iron or oven-safe skillet, cook the chorizo over medium heat until fully cooked. Remove from the pan and set aside.
In the same skillet, sauté the green pepper, yellow pepper, and onion until softened and slightly charred. Remove from the pan and set aside.
Turn off the heat. Begin layering your queso fundido: sprinkle one-third of the shredded cheese across the bottom of the skillet, followed by one-third of the cooked veggies and chorizo.
Repeat with two more layers of cheese, veggies, and chorizo, finishing with cheese on top.
Dust the top of the assembled queso with a light sprinkle of chili powder for flavor and color.
Place the skillet into the oven and bake for 4-5 minutes, just until the cheese is completely melted and bubbly.
Carefully remove from the oven, garnish with diced tomatoes and chopped cilantro, and serve immediately with tortilla chips or fresh veggies for dipping.