It’s not necessary to peel yellow squash, just make sure you wash it under cold water and use a light cloth or very soft brush. There are many types of squash and yellow squash falls in the summer squash variety, along with zucchini and some others. Like most summer squash, the entire yellow squash is edible, although I would discard the stem! You can eat the squash raw if you desire and of course, if you want to peel it, there's nothing wrong with that either!