In a large pot over medium-high heat, brown the ground beef and Italian sausage with diced onion until meat is no longer pink and onion is softened, about 10 minutes. Drain excess fat.
Add garlic and cook for 1 minute, then stir in crushed tomatoes, tomato paste, water, sugar, basil, salt, and pepper. Bring to a boil, then reduce heat and simmer uncovered for 45 minutes, stirring occasionally.
While sauce simmers, cook lasagna noodles according to package directions. Drain and rinse with cold water.
In a medium bowl, combine ricotta cheese, eggs, and 1 cup of Parmesan cheese.
Preheat oven to 375°F. Spread 2 cups of meat sauce in the bottom of a 9x13-inch baking dish.
Layer 4 noodles over sauce, spread with half of the ricotta mixture, top with one-third of remaining meat sauce, and sprinkle with 1 cup of mozzarella cheese.
Repeat layers, then top with remaining noodles, meat sauce, mozzarella, and Parmesan cheese.
Cover tightly with foil and bake for 45 minutes, then uncover and bake for 15 minutes until bubbly and cheese is golden.
Let rest for 15-20 minutes before slicing and serving.