Prep the ingredients. Peel and thinly slice the potatoes about 1/8 inch thick. Finely dice the onion and cut the cooked ham into bite-sized pieces.
Make the sauce. In a mixing bowl, whisk together the cream of mushroom soup and milk until smooth. Season with kosher salt and black pepper.
Build the first layer. Spread a thin layer of sauce in the bottom of a 7-inch air fryer–safe dish. Add a layer of potato slices, then scatter on some onion and ham, a little more sauce, and a sprinkle of cheddar.
Repeat the layers. Continue layering potatoes, onion, ham, sauce, and cheese until all the ingredients are used, finishing with a layer of sauce and a final blanket of cheddar on top.
Preheat. Preheat the air fryer to 360°F (180°C).
Cook. Place the dish in the air fryer basket and cook for 20–25 minutes. Cooking time varies by air fryer model and potato thickness. If the top browns before the potatoes are tender, tent loosely with foil and continue cooking.
Check doneness. The casserole is done when a fork slides easily through the potatoes and the cheese is melted and golden.
Rest. Let the casserole rest 5 minutes so the layers set and it's easier to serve.
Serve. Garnish with fresh parsley or chives and serve warm.