Butler graduated from what is now Colby College in 1838, was admitted to the Massachusetts bar in 1840. He began his practice at Lowell, Massachusetts and attained distinction as a lawyer, particularly in criminal cases.
Entering politics as a Democrat, he first attracted general attention by his violent campaign in Lowell in advocacy of the passage of a law establishing a 10-hour day for laborers; he was a member of the Massachusetts House of Representatives in 1853, and of the Massachusetts Senate in 1859, and was a delegate to the Democratic National Conventions from 1848 to 1860. In 1860, believing that only a moderate Southerner could hold the Union together, he voted to nominate Jefferson Davis for the Presidency. For the same reason, he supported John C. Breckinridge at the Democratic rump convention in Baltimore.
Governor John A. Andrew sent Butler with a force of Massachusetts troops to reopen communication between the Union states and Washington, D.C. By his energetic and careful work, he achieved his purpose without fighting, and he was soon afterwards appointed major general of U.S. Volunteers.
Assigned command of Fort Monroe, Butler declined to return fugitive slaves, who had come within his lines, back to their owners. It was on the ground that, as laborers for fortifications, they were contraband of war. Southern slaveowners were angered, because they regarded Butler's action as a confiscation of their property. After Fort Sumter, he facilitated the secure and free movement of Union troops to and from Washington by calming the Baltimore Riots. In the conduct of tactical operations, he was almost uniformly unsuccessful, and his first action at Big Bethel, was a humiliating defeat for the National arms. He was also head of the Department of Eastern Virginia.
Later in 1861, Butler commanded an expeditionary force, which, in conjunction with the navy, took Forts Hatteras and Clark, in North Carolina.
In 1862, he was appointed military governor of New Orleans after the city surrendered to the Union Navy. In the administration of the city, he showed great firmness and severity. Many women of New Orleans had been insulting and verbally abusing Union soldiers. The Union officers restrained themselves from reacting. In response, he issued General Orders No. 28, which stated that: "when any female shall, by word, gesture, or movement, insult of show contempt for any officer or soldier of the United States, she shall be regarded and held liable to be treated as a woman of the town plying her avocation (a prostitute)." He was removed from the military governorship on December 1862. He became known as "Beast" Butler. The general order provoked protests both in the North and the South, and also abroad, particularly in England and France. This was no doubt the cause of his removal from the city in December, 1862.
On June 1, Butler executed W.B. Mumford, who had torn down a U.S. flag on the United States Mint. For this execution, he was denounced in December 1862 by President Jefferson Davis in General Order 111 as a felon deserving capital punishment. Davis thought that if he was caught that he should be executed.
In the spring of 1864, Butler was placed in charge of the Army of the James and ordered to attack in the direction of Richmond from the east, destroying rail links and distracting Gen. Robert E. Lee, in conjunction with attacks from the north by Gen. Ulysses S. Grant. Grant had little use for Butler's military skills, but Butler had strong political connections that kept him in positions beyond his competence. His offensive bogged down east of Richmond at Bermuda Hundred and he was unable to accomplish any of his assigned objectives. But it was his mismanagement of the expedition against Fort Fisher, that finally led to his recall by Grant in December. He resigned his commission November 30, 1865.
He was a Republican representative in the U.S. Congress from 1867 to 1879, except from 1875 to 1877. In Congress, he was conspicuous as a Radical Republican in Reconstruction legislation, and wrote the 1871 Ku Klux Klan Act. He was one of the managers selected by the House to conduct the impeachment, before the Senate, of President Johnson, opening the case and taking the most prominent part in it. He exercised a marked influence over President Grant and was regarded as his spokesman in the House, and he was one of the foremost advocates of the payment in greenbacks of the government bonds. During his time in the House, he served chairman of the Committee on Revision of the Laws in the 42nd Congress and the Committee on the Judiciary in the 43rd Congress.
In 1872, Butler was among the several high-profile investors who were deceived by Philip Arnold in a famous diamond and gemstone hoax.
He was a defeated in his bid for governor of Massachusetts in 1878, and also in 1879 when he ran on the Democratic and Greenback tickets. In 1882, he was elected by the Democrats who did not get other state offices. From 1883 to 1884, he was Governor of Massachusetts. As presidential nominee of the Greenback and Anti-Monopoly parties, he lost the U.S. presidential election of 1884, when he had bitterly opposed the nomination by the Democratic party of Grover Cleveland.
Butler's income as a lawyer was estimated to be $100,000 yearly shortly before his death. As a politician, he excited bitter opposition, and was charged, apparently with justice, with corruption and venality in conniving at and sharing the profits of illicit trade with the Confederates carried on by his brother at New Orleans and by his brother-in-law in the department of Virginia and North Carolina, while he was in command.
He died while attending court in Washington, D.C. He is interred in Hildreth Cemetery in Lowell, Massachusetts.