Melt the butter in a saucepan over medium-low heat. Whisk in the flour and cook while stirring for 2 minutes.
Slowly whisk in the milk a little at a time. Whisk until smooth before adding more.
Whisk in the garlic powder, onion powder, black pepper, chili powder, paprika, salt, and cayenne pepper. Bring to a simmer.
Stir in the processed American cheese, diced green chilies, and diced jalapenos puree. Warm over medium-low heat, stirring often until the cheese is melted into the sauce, and bring to a simmer.
Remove from heat and stir in the shredded cheddar cheese. Add a little more milk and additional salt at this point, if needed.
Garnish with cilantro, if desired. Serve warm while warm.
Video
Notes
Note 1: Storage
Store cooled nacho cheese in an airtight container in the refrigerator for 3-4 days or freezer for up to four months. Thaw frozen cheese dip in the refrigerator.
Note 2: Reheat
Reheat on the stovetop over low heat, stirring often, until heated through. It can also be reheated on low in the microwave, stirring occasionally. Add more milk, a little at a time, if needed.