Boil sliced yellow squash and onion in lightly salted water for 7–10 minutes, until tender but still holding their shape. Avoid overcooking, as mushy squash can make the casserole watery.

Drain the cooked squash and onion thoroughly in a colander. Let them sit for a few minutes so excess moisture can escape before adding them to the creamy mixture.

Whisk together sour cream, mayonnaise, egg, cheddar cheese, salt, pepper, and garlic powder. Stir until smooth and evenly combined for a rich, creamy casserole filling.

Gently fold the drained squash and onion into the creamy mixture. Stir carefully so the tender squash keeps some of its shape instead of breaking apart.

Preheat the oven to 350°F and lightly grease a 9 × 13-inch baking dish. Spread the squash mixture evenly across the dish without pressing it down too firmly.

Melt butter in a small skillet over low heat and add crushed buttery crackers. Stir until the crumbs are evenly coated, then remove from the heat.

Sprinkle the buttery cracker crumbs evenly over the squash mixture. Add Parmesan cheese across the top for an extra savory layer and a beautifully golden finish.

Bake uncovered for 35–40 minutes, until the casserole is hot and bubbling around the edges and the topping is golden brown. Cover loosely with foil if it browns too quickly.

Let the baked casserole rest for 5–10 minutes before serving. This gives the creamy filling time to settle while keeping the buttery cracker topping pleasantly crisp.