In a medium saucepan set over medium heat, melt 2 tablespoons unsalted butter until foaming but not browned (about 1 minute). Add 2 tablespoons all-purpose flour and whisk continuously for 1 to 1 1/2 minutes to cook the raw flour taste; the mixture should be pale and slightly bubbling.

Add milk and cream

Slowly pour in 2 cups whole milk while whisking constantly to avoid lumps. Add 1/2 cup heavy cream. Continue whisking until the mixture is smooth.

Simmer to thicken

Bring the mixture to a gentle simmer (small bubbles at the edges) and cook, whisking occasionally, for 4–6 minutes until the sauce thickens to coat the back of a spoon.

Season the sauce

Reduce heat to low. Whisk in 1 teaspoon Dijon mustard, 1 teaspoon salt, 1/2 teaspoon freshly ground black pepper, and 1/8 teaspoon ground nutmeg. Taste and adjust seasoning as desired.

Melt in the cheese

Remove the saucepan from heat. Add the 3 cups shredded Monterey Jack in three additions, stirring and allowing each addition to melt fully into the sauce before adding the next. Stir until the sauce is smooth and glossy. Keep the sauce warm over the lowest heat or a warm water bath to prevent separation.

Optional Mix-ins & Topping

Prepare optional toppings

If using, toss 1/2 cup panko breadcrumbs with 1 tablespoon olive oil in a small bowl until evenly coated. This gives a crisp toasted topping when broiled.

Combine mix-ins (optional)

Stir 2 tablespoons thinly sliced green onions and 1/2 cup crumbled cooked bacon into the warm cheese sauce if you want added flavor and texture. Mix until evenly distributed.

Assemble and brown (optional)

Transfer the cheese mixture to an oven-safe shallow dish. Evenly sprinkle the oiled panko breadcrumbs over the top. Place under a preheated broiler on high about 6 inches from heat and broil 1–2 minutes, watching carefully, until crumbs are golden brown. Remove immediately to prevent burning.

Serve

Spoon the hot Monterey Jack sauce over prepared vegetables, pasta, nachos, baked potatoes, or use as a dip. Garnish with additional sliced green onions if desired.