Preheat the oven to 350 degrees F (175 degrees C). Grease a 7x11-inch baking dish.

Melt butter in a skillet over medium heat. Add onion; cook and stir until translucent, about 5 minutes. Transfer onion to a large bowl; stir in chicken, soup, sour cream, milk, and pimentos until combined. Transfer chicken mixture to the prepared baking dish.

Bake in the preheated oven until chicken and sauce are hot, about 15 minutes. Sprinkle top with 3/4 cup Cheddar cheese; arrange biscuits in a single layer on top. Sprinkle remaining 1/4 cup Cheddar cheese on top.

Continue baking in the oven until sauce is bubbling and biscuits are golden brown, about 20 minutes.