Butler was born in Augusta, New York, on February 7, 1801. His father, Chancey Butler, moved the family west to Jennings County, Indiana, in 1817. The elder Butler became one of the first Restoration Movement or Stone-Campbell Movement preachers in Indiana. Butler studied law and practiced as an attorney in Shelbyville, Indiana, from 1825-1836. He was also an abolitionist. Butler University was dedicated to him in 1855. During this time he married Cordelia Cole. With Cordelia, Butler had three children.
