Preheat the pellet smoker to 275°F. Use a mild wood pellet, such as apple or cherry, for a gentle smoke flavor.

In a large bowl, combine the egg, breadcrumbs, milk, Parmesan, parsley, Italian seasoning, garlic powder, and black pepper. Stir until the breadcrumbs are moistened.

Add the Italian sausage and ground beef. Mix gently just until combined. Avoid squeezing or overworking the meat, which can make the loaf dense.

Place half of the meat mixture on a sheet of parchment paper and shape it into a thick rectangle. Arrange the mozzarella cubes down the center, leaving space around the edges. Cover with the remaining meat mixture and seal the edges well so the cheese stays inside.

Shape the mixture into a compact loaf and place it on a smoker-safe tray. Spoon ½ cup of marinara over the top, spreading it into an even layer.

Set the tray in the smoker and cook until the center reaches 160°F on an instant-read thermometer, about 1½ to 2 hours. Spoon the remaining ¼ cup marinara over the loaf during the final 15 minutes of cooking.

Remove the meatloaf from the smoker and let it rest for 10 minutes before slicing. This helps the juices settle and keeps the mozzarella from spilling out too quickly.