Place squash and water in a 1-1/2-qt. microwave-safe bowl. Cover and microwave on high for 2-3 minutes or until crisp-tender; drain well. Stir in the green pepper, onion, pecans, mayonnaise, 1/3 cup of cheese, sugar, salt and pepper.
Transfer to a lightly greased shallow 1-1/2-qt. baking dish. Cover and bake at 350° for 25 minutes. Sprinkle with remaining cheese. Bake, uncovered, 5 minutes longer or until cheese is melted.
Editor's Note: Reduced-fat or fat-free mayonnaise is not recommended for this recipe.