Wash and scrape squash. Slice thinly into a bowl and set aside.
In a large skillet, heat butter and olive oil. Add onion and saute until limp. Add the water chestnuts and continue cooking at low heat until chestnuts appear golden. Add sliced squash and seasonings and stir to mix thoroughly with the saute.
Cover and cook on low heat 15 to 20 minutes, or until squash is tender.