Carefully slice the top of the Italian bread loaf off, creating a lid. Hollow out the inside of the loaf with your hands or a spoon, leaving about a 1-inch border.
In a medium bowl, combine the shredded mozzarella cheese, sun-dried tomatoes, grated Parmesan cheese, and basil pesto. Mix well until everything is evenly coated.
Season the cheese mixture with garlic powder, red pepper flakes (if using), salt, and pepper to taste.
Fill the hollowed-out bread with the cheese and pesto mixture, pressing down gently to pack it in.
Place the lid back on the loaf and wrap the entire loaf in aluminum foil.
Transfer the wrapped bread to the preheated oven and bake for 20-25 minutes until the cheese is fully melted.
Remove the loaf from the oven and unwrap it carefully. Drizzle the top with olive oil and return it to the oven for an additional 5-10 minutes to crisp up the crust.
Once golden and crispy, remove from the oven and let it cool for a few minutes.
Slice the stuffed bread into pieces, serve warm, and garnish with fresh basil leaves.