Cook the bacon in a large skillet over medium heat until crispy. Remove with a slotted spoon and drain on a paper towel-lined plate.
Add the diced jalapenos to the skillet with the bacon grease and cook until they are greenish-brown and fragrant. Remove to plate with the bacon.
Combine the cream cheese, mayonnaise, and 1 1/2 cups of cheddar cheese in a mixing bowl until smooth.
Add almost all of the cooked bacon and jalapeno to the cream cheese mixture. (I like to save a little top put on top of the dip.) Stir everything together until completely incorporated.
Transfer the dip mixture to an oven-safe casserole dish and bake for 20 minutes.
Carefully remove the dish from your oven and add the remaining 1/2 cup of cheese in an even layer on top of the dip. Place back into the oven for another 5 minutes until the cheese has melted.
Remove from oven and top with the reserved bacon and jalapeno. Serve warm with your favorite chips or crackers.