Preheat oven to 375°F.
Warm olive oil in a 12-inch cast iron skillet over medium heat. Cook the mushrooms, onion and garlic until softened and all liquid has evaporated, 5 to 6 minutes. Add sausage and cook until no longer pink, about 5 minutes. Use the back of a wooden spoon to break the sausage into small pieces as you cook.
Stir in the diced tomatoes, tomato sauce, oregano, 1 1/2 teaspoons salt, and red pepper flakes. Raise heat to high to bring the mixture to a boil, then reduce to medium heat and continue cooking until the sauce has thickened and has only about 1/4 cup of “watery” liquid on top, 8 to 10 minutes. Remove the skillet from heat.
Meanwhile, mix together the ricotta, 1 cup mozzarella, 3/4 cup parmesan, basil, black pepper, and remaining ½ teaspoon salt in a medium bowl.
Transfer all but. a very thin layer to coat the skillet of the tomato sauce to a bowl. Place about 4 noodles over the thin layer of sauce, breaking them and overlapping them as needed to form a layer. Spread one-third of the ricotta mixture over the noodles. Repeat the layering two more times with the tomato sauce, noodles and ricotta. Finish by topping the ricotta mixture with a final layer of noodles, and covering them with the remaining tomato sauce. The top layer of noodles needs to be completely submerged in tomato sauce, if it’s not, the noodles won’t cook! If you accidentally run out of sauce, you can pour a small amount of water over top until they’re submerged.
Sprinkle the remaining 1 cup mozzarella and 1/4 cup Parmesan over top.
Tent the skillet loosely with foil, being sure not to touch the cheese. Transfer the skillet to the oven and bake for 40 minutes, then remove the foil and broil until the mozzarella is gooey and lightly golden, 3 to 4 additional minutes.
Allow the lasagna to rest for at least 10 minutes before slicing. Cut into 6 to 8 pieces and serve with freshly torn basil.
