Lightly drizzle spaghetti squash with olive oil and rub in to cover the entire squash.
Place squash halves, cut sides down, on a baking dish. Bake for 50-60 minutes until tender.
Let cool slightly. Use a fork to separate the strands of squash.
Meatballs
Meanwhile, in a large bowl combine the egg, water, bread crumbs, Italian seasoning, garlic, salt and pepper.
Add ground beef, broken into chunks, and mush with your hands to combine. Shape into 1-inch meatballs.
Lightly coat a very large skillet with cooking spray; heat skillet over medium-high heat.
Add meatballs to hot skillet; cook until browned, turning occasionally to brown evenly.
Sauce
Add tomatoes, sugar, crushed red pepper, salt, and 2 teaspoons Italian seasoning into the hot skillet with the meatballs. Bring to a boil; reduce heat. Simmer, uncovered for 10 minutes.
Serving
Serve meatballs and sauce over squash. Top with grated Parmesan cheese and fresh basil (if desired)