In a large Dutch oven, cook sausage, ground beef, onion, and garlic over medium heat until browned. Drain excess fat.
Stir in crushed tomatoes, tomato paste, tomato sauce, and water. Add sugar, 2 tbsp parsley, basil, Italian seasoning, fennel, 1 tsp salt, and pepper. Simmer covered for 1.5 hours, stirring occasionally.
Meanwhile, cook lasagna noodles in salted water until al dente (8–10 minutes). Drain and rinse in cold water.
In a bowl, mix ricotta with egg, remaining parsley, and 1/2 tsp salt.
Preheat oven to 375°F (190°C).
Spread 1 1/2 cups of meat sauce in a 9x13-inch baking dish. Layer 6 noodles, half the ricotta mix, 1/3 mozzarella, and 1 1/2 cups meat sauce. Sprinkle with 1/4 cup Parmesan.
Repeat layers. Top with remaining mozzarella and Parmesan.
Cover with foil (grease or tent to avoid sticking) and bake for 25 minutes. Uncover and bake 25 more minutes. Let rest 15 minutes before slicing.