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Butler was named for Maj. Gen. Richard Butler, who fell at the Battle of the Wabash, also known as St. Clair's Defeat, in western Ohio in 1791. In 1803, John and Samuel Cunningham became the first settlers in the village of Butler. After settling in Butler, the two brothers laid out the community by drawing up plots of land for more incoming settlers. in what is now known as the Little Red Schoolhouse. The Butler Area Public Library, built in 1921, was the last Carnegie library to be built in Pennsylvania. In the intervening 27, years the library was independently operated.

In the early 1900s, Butler was a "Steel Belt" manufacturing and industrial area. It remains home to a Cleveland Cliffs Butler Works, formerly AK Steel Butler Works. In 1902, the Standard Steel Car Company opened one of its largest railcar manufacturing facilities in Butler, where it manufactured some of the first all steel rail cars. Standard Steel Car Company merged with Pullman Palace Car Company in 1934, creating Pullman Standard, a monopoly that was eventually broken by the federal government. About 2,500 workers produced 60 steel bed railroad cars per day in 1902. Eastern European immigrants were lured to the area in the early 20th century with the promise of reliable jobs, which offered company housing and a company store. The company constructed a baseball park which was the home of a New York Yankees farm team. The steel workers of Butler made artillery and naval shells during World War II. The American Austin Car Company (1929–1941) was headquartered in the area. Later the firm changed its name to American Bantam Car Company. Bantam was an early producer of small fuel efficient vehicles through the 1930s. In 1940, lead engineer Karl Probst led Bantam design team to create what later was termed the iconic WWII Jeep. Sizeable military contracts eventually went to Willys and Ford, as the Bantam factory had floundered. Today, a controversial monument stands near the courthouse commemorating Bantam's "creation of the Jeep". Butler is home to one of the early Ford dealerships, established in 1918 and still extant. At one point, the Rainbow Rubber Company, in the late 1930s, made "Rubrtoy" replicas of Oldsmobiles along with many other rubber toys. In the 1950s, Butler became one of the first cities to install bells at crosswalks, a common practice today. Pedestrians could cross in either direction. The city was linked to Pittsburgh via Mars, Pennsylvania, in 1907 by the Pittsburgh and Butler Street Railway, and to Evans City in 1908 by the Pittsburgh, Harmony, Butler and New Castle Railway, both interurban trolley lines. The Mars route closed in April 1931, followed by the Evans City line on August 15, 1931, with the trolleys replaced by buses. Like most of the region, by the end of the 1970s, the local economy changed dramatically. Manufacturing virtually ended and well paying jobs became scarce.

According to the United States Census Bureau, the city has a total area of 2.7 square miles (7 km2), all land. Connoquenessing Creek is the only waterway to pass through the city. In 2000, a scientific study was conducted to determine the health of the creek. Researchers discovered that only the Mississippi River received more toxic materials than the Connoquenessing, making the small river the second most polluted waterway in the United States. At the time, the Armco Inc. steel facility in Butler ranked first nationally for the amount of pollutant discharges. However, by 2010, due to reduced industry and clean up efforts, the creek's health has significantly recovered and has become popular for water sport activities.

As of the 2000 census, there were 15,121 people, 6,740 households, and 3,626 families residing in the city. The population density was There were 7,402 housing units at an average density of The racial makeup of the city was 93.6% White, 2.7% African American, 0.2% Native American, 0.5% Asian, 0.52% from other races, and 1.14% from two or more races. Hispanic or Latino of any race were 4.88% of the population. There were 6,740 households, out of which 26.8% had children under the age of 18 living with them, 35.0% were married couples living together, 14.4% had a female householder with no husband present, and 46.2% were non families. 40.7% of all households were made up of individuals, and 16.3% had someone living alone who was 65 years of age or older. The average household size was 2.18 and the average family size was 2.96. In the city, the population was spread out, with 23.7% under the age of 18, 9.7% from 18 to 24, 30.3% from 25 to 44, 20.2% from 45 to 64, and 16.1% who were 65 years of age or older. The median age was 36 years. For every 100 females, there were 88.1 males. For every 100 females age 18 and over, there were 83.9 males. The median income for a household in the city was $25,154, and the median income for a family was $35,893. Males had a median income of $30,607 versus $20,950 for females. The per capita income for the city was $16,457. About 14.7% of families and 19.1% of the population were below the poverty line, including 26.8% of those under age 18 and 14.5% of those age 65 or over.

The Butler Little Theatre has been running productions continuously since 1941. The Musical Theater Guild produces an annual musical production. In 2012, Hobnob Theatre Company began producing several plays, including an annual production of Charles Dickens' A Christmas Carol. The Maridon Museum is the only museum in the Western Pennsylvania region with a specific focus on Chinese and Japanese art and culture. The Little Red School House is a former one room schoolhouse that taught students from 1839 to 1874. Throughout its history, it has been a post office, library and Red Cross headquarters. It became a museum in 1966 and is run by the Butler County Historical Society. Butler is home to the Butler County Symphony Association, which performs at the Butler Intermediate High School auditorium. The city features artist groups including the Associated Artists of Butler County and the Butler Arts Council, which host galleries and live events at the Art Center, located on Main Street. Stewart O'Nan's prizewinning 1994 novel Snow Angels is set in Butler, with the protagonist being a local high school student. However, the 2007 film adaption, shot in Canada, removes all references to Butler. Stephen King's 2002 novel From A Buick 8 takes place in the area. Charles Cingolani penned an entire book of poetry about the area in The Butler Pennsylvania Poems (2010). The city was the setting for several scenes in the 2015 novel trilogy Benjamin's Field by local author J. J. Knights.

The Butler Road Race, a 5 mile and 2 mile race held each summer in June, raises scholarship funding for local students. The Butler Italian Festival is an annual street fair that features ethnic foods, live music and events. The Bantam Jeep Heritage Festival, the Largest Jeep Festival in the US, is held annually in June with off road trails, a Jeep Playground obstacle course, and the "original" Jeep Invasion street party.

Butler BlueSox, active from 2006 to present. Michelle Krill Field at Historic Pullman Park (formerly known as Pullman Park until 2014), built in 1934, was used for minor league baseball for twenty years until the Pittsburgh Pirates farm team left in 1951. The ballpark saw many famous faces during its professional baseball days, including Lou Gehrig, Whitey Ford, and Joe DiMaggio, who played for a farm team of the New York Yankees. Revamped in 2008, the stadium is the home of the Butler BlueSox.

Doughboy Park, primarily a memorial dedicated to those who lost their lives in World War I.
Butler Memorial Park, once featured a community pool, but it has remained closed since the late 2000s. Father Marinaro Park, features a skateboard park. Ritts Park, a small park in the northernmost portion of the city with various courts. Rotary Park, a curved park near the Pullman baseball park.

There are two airports located outside the city. Butler County Airport is used for general aviation, and may accommodate large aircraft such as corporate jets. Butler Farm Show Airport is used by pilots with smaller, private aircraft. Pittsburgh International Airport is nearby.

Butler is served by The Bus, run by the Butler Transit Authority. The Butler Transit Authority also offers a Commuter service, which operates between Butler and the City of Pittsburgh.

Two railroads currently offer freight service in Butler. The Canadian National Railway owned Bessemer and Lake Erie Railroad main line passes through the city, while the Buffalo and Pittsburgh Railroad provides regional service in the area. The B&P has a large locomotive shop located just outside the city limits.

Five major highways run through or near the city, providing links to other areas throughout Western Pennsylvania. The south terminus of Pennsylvania Route 38 is just north of the city at U. S. Route 422. Route 422 skirts the city, to the north, on the Butler Bypass. PA 68 and PA 356 go straight through downtown, where they intersect with PA 8 (Butler's Main Street).