Layer squash, onion, and green pepper in a large glass or ceramic container; sprinkle with salt. Cover and let stand 1 hour. Rinse squash mixture several times in cold water; drain well.
Combine vinegar, sugar, celery seeds, and mustard seeds in a stainless steel stockpot; bring to a boil. Add squash mixture. Reduce heat; simmer 10 minutes, stirring occasionally.
Pack squash and onion into hot sterilized jars; cover with syrup, leaving 1/2-inch headspace. Remove air bubbles. Cover at once with metal lids, and screw bands tight. Process in boiling-water bath 15 minutes.