Prep the squash and onion: Wash the yellow squash and slice into thin rounds. Thinly slice the onion.
Cook the squash and onion: In a large skillet over medium heat, add the olive oil or butter. Add the sliced squash and onion, season lightly with salt and pepper, and cook, stirring occasionally, until the squash is tender and most of the moisture has cooked off, about 8–10 minutes. If there’s a lot of liquid in the pan, drain off the excess so the casserole doesn’t get watery.
Make the filling: In a large bowl, stir together the cream of chicken soup, sour cream, 1/2 cup of the shredded cheddar cheese, and 1 cup of the crushed crackers. Fold in the cooked squash and onions until everything is evenly coated.
Assemble the casserole: Spread the squash mixture evenly into the prepared baking dish. Sprinkle the remaining 1/2 cup shredded cheddar cheese over the top.
Add the topping: In a small bowl, combine the remaining 1/2 cup crushed crackers with the melted butter (if using). Stir until the crumbs are evenly coated, then sprinkle the mixture over the cheese layer.
Bake: Place the casserole in the preheated oven and bake for 25–30 minutes, or until the top is golden brown and the edges are bubbly.
Rest and serve: Let the casserole sit for about 5–10 minutes before serving so it can set slightly. Taste and add a little extra salt and pepper at the table if needed.
• Make it vegetarian: Swap the cream of chicken soup for cream of mushroom or cream of celery. The rest of the recipe stays exactly the same. • Lighten it up a bit: Use light sour cream and reduced-fat cheddar cheese. You can also cut the cracker topping in half and skip the extra melted butter if you want a slightly lighter dish while still keeping the flavor and texture. • Add protein: Stir in 1 to 1 1/2 cups of cooked, shredded chicken or diced ham with the squash mixture to turn this into more of a main dish casserole—perfect for using up leftovers. • Extra veggies: Fold in a handful of frozen peas, corn, or chopped steamed broccoli for more color and nutrition. Just make sure any added veggies are drained well so the casserole doesn’t get watery. • Make-ahead tip: You can assemble the casserole (without the cracker topping) up to a day in advance, cover, and refrigerate. When you’re ready to bake, add the cracker topping and bake, adding an extra 5–10 minutes if it’s going into the oven cold. • Freezer-friendly shortcut: If you know you’ll have extra squash, cook and cool the squash and onion mixture, then freeze it in a zip-top bag. Later, just thaw, stir together with the remaining ingredients, and bake as directed for a quick side on a busy night.