Preheat the oven to 350°F. Lightly grease a 9×9-inch or similar 2-quart baking dish.
Place the sliced yellow squash and diced onion in a large skillet or saucepan with a small amount of water. Cook over medium heat for 8–10 minutes, until the squash is tender. Drain thoroughly and gently press out excess moisture.
Transfer the drained squash and onion to a large bowl. Add 2 tablespoons butter and gently mash some of the squash while leaving plenty of pieces intact.
In a separate bowl, whisk together the eggs, sour cream, cheddar cheese, garlic powder, salt, and black pepper.
Add the creamy mixture to the squash and gently stir until evenly combined.
Transfer the squash mixture to the prepared baking dish and spread it into an even layer.
Combine the crushed Ritz crackers with 2 tablespoons melted butter. Sprinkle the buttery cracker mixture evenly over the casserole.
Bake uncovered for 25–30 minutes, until the filling is hot and set and the cracker topping is golden brown. Let rest for 5 minutes before serving.

Squash: Choose small to medium yellow squash for the best texture and flavor.

Drain well: Removing excess moisture from the cooked squash is important to prevent a watery casserole.

Crackers: Crush the Ritz crackers into coarse crumbs rather than a fine powder for a crunchier topping.

Cheese: Sharp cheddar gives the casserole more flavor, but mild cheddar also works well.

Make ahead: Prepare the squash filling and refrigerate it in the baking dish. Add the buttery cracker topping just before baking so it stays crisp.

Storage: Refrigerate leftovers in an airtight container for 3–4 days.

Reheating: Reheat uncovered in the oven or air fryer when possible to help restore the crispy topping.