Butler was born in Huntsville, Alabama, and raised in Birmingham. He began his acting career in the early 1980s, appearing in small roles in films such as The Right Stuff (1983) and Beverly Hills Cop (1984). He also had a recurring role on the sitcom Night Court from 1984 to 1985.
Butler's breakthrough role came in 1993 when he was cast as Bulldog Briscoe on Frasier. The show was a critical and commercial success, and Butler's performance was praised by critics. He remained on the show for its entire eleven-season run.
In addition to his work on Frasier, Butler has also appeared in films such as The Sandlot (1993), Dumb and Dumber (1994), and The Drew Carey Show (1995-2004). He has also written several books, including "Don't Quit Your Gay Job: Show Biz from a Queer Point of View" (2006) and "The Only Funny Part: True Tales of a Sitcom Dad" (2013).
Butler is openly gay and has been active in the LGBT community. He has been a vocal advocate for LGBT rights and has served on the board of directors of several LGBT organizations.