Born in Harrow in 1819, Butler was from a family that had great educational influence in the 19th century, more than that of Arnold of Rugby.
His brother the Very Reverend Henry Montagu Butler followed his father's footsteps and also became headmaster of Harrow School, later becoming Dean of Gloucester and Master of Trinity College, Cambridge.
He transferred to Exeter College, Oxford in 1840, where he was Hertford Scholar in 1841, and graduated with a first-class degree in classics, B.A.
Liverpool College's academic performance improved, with six open scholarships to Oxford and Cambridge by 1869.
On 28 January 1870 it was announced that "a Liverpool boy had for the first time won the most coveted award at Cambridge or any other University" – this was Richard Pendlebury, Senior Wrangler in 1870.