Preheat the oven to 350 degrees F (175 degrees C).
Place potatoes into a pot and fill with enough water to cover. Bring to a boil and cook until easily pierced with a fork, about 12 minutes. Drain and pour into a 9x13 inch baking dish. Mix with mayonnaise, processed cheese and onion.
While the potatoes are boiling, fry the bacon in a large skillet over medium heat until crisp. Drain and break into large pieces. Place on top of the potatoes.
Bake for 1 hour in the preheated oven, until cheese is browned.