Place the yeast and sugar in the bowl of a stand mixer fitted with a dough hook or paddle attachment. Or, if you do not own a stand mixer, a regular large mixing bowl. Whisk in the warm milk, then loosely cover with a clean kitchen towel and allow to sit for 5-10 minutes. The mixture will be frothy after 5-10 minutes.

Add the butter, egg, flour, salt, garlic powder, and dried basil. Beat on low speed for 3 minutes. Dough will be soft.

Keep the dough in the mixer (and switch to the dough hook if using the paddle) and beat for an additional 5 full minutes, or knead by hand on a lightly floured surface for 5 full minutes. (If you’re new to bread-baking, my How to Knead Dough video tutorial can help here.) If the dough becomes too sticky during the kneading process, sprinkle 1 teaspoon of flour at a time on the dough or on the work surface/in the bowl to make a soft, slightly tacky dough. Do not add more flour than you need because you do not want a dry dough. After kneading, the dough should still feel a little soft. Poke it with your finger—if it slowly bounces back, your dough is ready to rise. You can also do a “windowpane test” to see if your dough has been kneaded long enough: tear off a small (roughly golfball-size) piece of dough and gently stretch it out until it’s thin enough for light to pass through it. Hold it up to a window or light. Does light pass through the stretched dough without the dough tearing first? If so, your dough has been kneaded long enough and is ready to rise. If not, keep kneading until it passes the windowpane test.

Shape the kneaded dough into a ball. Place the dough in a greased bowl (I use nonstick spray to grease) and cover with plastic wrap or aluminum foil. Place in a slightly warm environment to rise until doubled in size, around 60-90 minutes. (If desired, use my warm oven trick for rising. See my answer to Where Should Dough Rise? in my Baking with Yeast Guide.)

As the dough rises, grease a 9×5-inch loaf pan and prepare the pesto.

Punch down the dough to release the air. Place dough on a lightly floured work surface. Divide it into 12 equal pieces, about 1/4 cup of dough or 50g each (a little larger than a golf ball). Using lightly floured hands, flatten each into a circle that’s about 4 inches in diameter. The circle doesn’t have to be perfectly round. I do not use a rolling pan to flatten, but you certainly can if you want. Spread 1-2 teaspoons of pesto onto each. Sprinkle each with 1 heaping Tablespoon of mozzarella cheese. Fold circles in half and line in prepared baking pan, round side up. See photos above for a visual.

Cover with plastic wrap or aluminum foil and allow to rise once again in a slightly warm environment until puffy, about 45 minutes. Do not extend this 2nd rise, as the bread could puff up too much and spill over the sides while baking.

Adjust the oven rack to the lower third position then preheat oven to 350°F (177°C).

Bake until golden brown, about 50 minutes. If you find the top of the loaf is browning too quickly, tent with aluminum foil. Remove from the oven and place the pan on a cooling rack.

Mix the melted butter and garlic powder together. Brush on the warm bread and sprinkle with parmesan cheese. If desired, drop a couple spoonfuls of fresh pesto on top (or serve with extra pesto.) Cool for 10 minutes in the pan, then remove from the pan and serve warm.

Cover and store leftovers at room temperature for up to 2 days or in the refrigerator for up to 1 week. Since the bread is extra crispy on the exterior, it will become a little hard after day 1. Reheat in a 300°F (149°C) oven for 10-15 minutes until interior is soft again or warm in the microwave.