In a medium saucepan, melt the butter. Add the red onion and cook on medium heat until softened.
Add the sliced pickled jalapenos and flour. Mix until incorporated.
ΒΌ cup at a time, add the milk. Stir after each addition until the milk mixture just starts to thicken before adding more.
Add the shredded cheese, cream cheese, and seasonings. Stir, taking off the heat once the cheese has melted.
Slowly add more milk if the queso sauce is too thick. If it is too thin, leave it on the warm burner longer or turn the heat back on and cook on medium heat, stirring occasionally, until the sauce thickens to your desired consistency.
Enjoy!