Gather all ingredients. Preheat the oven to 400 degrees F (200 degrees C). Lightly grease a 9x13-inch casserole dish; set aside.
Place squash and onion in a large skillet over medium heat; pour in water. Cover, and cook until squash is tender, about 5 minutes. Drain well, and place in a large bowl.
Mix cracker crumbs and cheese together in a separate bowl. Stir half of the cracker mixture into the cooked squash and onions.
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 lightly browned, about 25 minutes.
Serve hot and enjoy!