Gather all ingredients. Preheat the oven to 400 degrees F (200 degrees C). Lightly grease a 9x13-inch casserole dish; set aside.
Place squash, onion, and water in a large skillet over medium heat. Cover and cook until squash is tender, about 5 minutes. Drain well and transfer to a large bowl.
Mix cracker crumbs and cheese together in a separate bowl. Stir half of the cracker mixture into cooked squash mixture.
Mix eggs and milk together in a small bowl, then add to squash mixture; stir in ¼ cup melted butter, and season with salt and pepper. Spread mixture into the prepared baking dish.
Sprinkle with remaining cracker mixture, and dot with 2 tablespoons butter.
Bake in the preheated oven until golden brown on top and set, about 25 minutes.
Serve hot and enjoy!
