John was born to Walter Butler and Deborah Ely, née Dennison, in New London, Connecticut in 1728. His family soon moved to the frontier in the Mohawk Valley near modern Fonda, New York. In 1752, he married Catherine Bradt, and the couple raised five children. He knew several Indian languages and was employed as an interpreter.
In 1755, he was made Captain in the Indian department and saw service in the French and Indian War. He saw action at Fort Ticonderoga, the Battle of Fort Frontenac, the Battle of Fort Niagara, and Montreal. At the Battle of Fort Niagara he was second in command of the Indians.
After the war he came home, and built his estate up to 26,000 acres (105 km²) at Butlersburg, near Caughnawaga. He was second only to Sir William Johnson as a wealthy frontier land owner. He was a judge in the Tryon County court. he was appointed Lt. Colonel of Guy Johnson’s regiment of Tryon County militia. Butler worked under Sir William Johnson in the Indian department. Butler was one of the two members representing Tryon County in the New York assembly.
Butler returned to service as a Loyalist when the American Revolution turned to war in 1775. In May, 1775, he left for Canada in the company of Daniel Claus, Walter Butler, Hon Yost Schuyler and Joseph Brant. On July 7, they reached Fort Oswego and in August, Montreal. He was involved in the defense of Montreal against an attack lead by Ethan Allen. In November, Carleton sent him to Fort Niagara with instructions to keep the Indians neutral.
His oldest son Walter Butler served with him, but his wife and other children were detained by the American rebels.
In March, 1777 he sent a party of about one hundred Indians to Montreal to force the Americans out of Quebec. In May, Butler received instructions to employ a body of the Six Nations in an attack on New York. On June 5 he received instructions to send as many Indians as he could to Fort Oswego for an attack on Fort Stanwix as a part of the Saratoga campaign. He was put second in command of the Indians, under Daniel Claus.
He led the Indians and a small number of Loyalists in a successful ambush in the Battle of Oriskany. As a result, after this expedition he was commissioned a lieutenant colonel and given authority to raise his own regiment, which became known as Butler’s Rangers, initially with a strength of eight companies. He traveled back to Fort Niagara and the first company was completed in December.
In July 1778, Butler led his rangers and Iroquois allies at the Battle of Wyoming, in which he defeated Zebulon Butler and took Forty Fort. The Patriots suffered heavy losses, and after the battle many homes in the area were burned. Later, the battle was referred to as the Wyoming Valley massacre because some of the victorious Loyalists and Iroquois were said to have executed and scalped prisoners and fleeing enemy soldiers. Later that year, after the burning of Tioga, his son Captain Walter Butler led two companies of rangers and 300 Iroquois allies in a raid which was later referred to as the Cherry Valley massacre. The name of Butler was thereafter anathema to the rebels.
His unit of rangers was spread through frontier outposts from Niagara to Illinois. Butler himself commanded from Fort Niagara. In 1779, he was defeated by the Sullivan Expedition at the Battle of Newtown, and withdrew to Fort Niagara.