Preheat your oven to 350°F and grease a 9x13-inch baking dish.
After shredding the zucchini, place it in a clean kitchen towel and squeeze out as much moisture as you can. This is super important or your casserole will be watery!
Melt the butter in a small skillet over medium heat and sauté the diced onion until soft and translucent, about 5 minutes.
In a large bowl, combine the cooked rice, squeezed zucchini, sautéed onions, cream of mushroom soup, sour cream, 1½ cups of the shredded cheese, salt, pepper, and garlic powder. Mix everything together until well combined.
Pour the mixture into your prepared baking dish and spread it out evenly.
Top with the remaining 1/2 cup of cheese and sprinkle with panko breadcrumbs if you want a little extra crunch on top.
Bake for 30-35 minutes until the casserole is hot and bubbly and the top is golden brown. Let it rest for 5 minutes before serving.