Butler University was founded in 1855 as North Western Christian University (NWCU). Members of the Christian Church (Disciples of Christ), a Protestant denomination, founded the institution; however, the institution was not a denominational school but sectarian, meaning that the Christian Church never officially controlled or was associated with NWCU. From its inception, NWCU accepted men, women, and people of color as students and made no restrictions on admittance based upon gender, race, or religion. It was one of the first institutions in Indiana to do so. Its first campus was located on the near-north side of Indianapolis at what is now 13th Street and College Avenue and is historically known as the College Avenue campus. NWCU resided on this campus from 1855 to 1875.

In the fall of 1875, NWCU moved to a new campus located in a recently incorporated town east of Indianapolis: Irvington. This second campus was bounded by Emerson Avenue, Butler Avenue, and two railroads. In 1877—two years after moving—the institution was renamed as Butler University in honor of its major financial supporter and primary founder Ovid Butler. Butler University resided on this campus from 1875 to 1928.

Beginning in 1896 Butler University participated in a chartered partnership of academic institutions known as the University of Indianapolis (unassociated with the current University of Indianapolis, which was founded in 1902 as Indiana Central University). Changing its name to Butler College, it remained independent while serving as the liberal arts and sciences college. Other participating schools included the Indianapolis professional schools of dentistry, law, and medicine. Students could take classes and earn degrees from multiple schools within the group. Butler University participated in this agreement until 1906, the year the partnership ended. The name of the institution reverted to Butler University several years after the partnership ended. In 1928, after years of fundraising and planning, Butler University officially moved to its third—and present—campus located on the north side of Indianapolis. The site had previously been Fairview Park, a trolley park owned by the Indianapolis Street Railway Company. The campus opened with two major buildings: Arthur Jordan Memorial Hall (commonly referred to today as Jordan Hall) and Butler Fieldhouse (renamed Hinkle Fieldhouse in 1965 to honor long time coach Paul “Tony” Hinkle) and has grown significantly over the years. Today, the core section of the Fairview Campus is bounded by Hampton Drive, Sunset Avenue, 52nd Street, and the Central Canal. In 2017 the University purchased the forty-acre campus of the Christian Theological Seminary—bounded by 42nd Street, Haughey Avenue, and the Central Canal—and it is now known as South Campus.

Butler University comprises six colleges. Some of the colleges were established at Butler University, others were mergers, and one not counted separated:

- College of Liberal Arts and Sciences (circa 1855): This College was originally established as the College of Literature and Science.

- College of Religion (1924-1958): This College—also referred to as the School of Religion—became independent in 1958.The seminary is now known as Christian Theological Seminary (CTS).

- College of Education (1930): This College was originally known as the Teachers College of Indianapolis (TCI) prior to its merger with Butler University (combining with the University’s Department of Education) in 1930; TCI had an affiliation with the University beginning in 1926. TCI was founded in 1882 by Eliza A. Blaker, a kindergarten and education advocate.

- Lacy School of Business (1937): This College was originally known as the College of Business Administration and was established at Butler University in 1937. Its name was shortened to the College of Business around 2009. The College was renamed the Andre B. Lacy School of Business in 2016 in honor of a $25-million donation to the University by Andre B. Lacy, an Indianapolis businessman and philanthropist, and Julia B. Lacy.

- College of Pharmacy and Health Sciences (1945): This College was originally known as the Indianapolis College of Pharmacy prior to its merger with Butler University in 1945. In 1995, the College’s name was updated from the College of Pharmacy to the College of Pharmacy and Health Sciences.

- Jordan College of the Arts (1951): This College was originally known as the Jordan College of Music (JCM) prior to its merger with Butler University in 1951. Prior to this, JCM had been associated with Butler University for 23 years. JCM was previously known as the Arthur Jordan Conservatory of Music (AJCM); the AJCM was established in 1928 following the purchase and merger of the Metropolitan School of Music (established in 1895) and the College of Musical Arts (established in 1907) by Arthur Jordan, and it was renamed JCM in 1949. In 1979, JCM became the Jordan College of the Fine Arts, and the name changed to the Jordan College of the Arts (JCA) in 2012.

- College of Communications (2010): This College was officially formed in 2010. Prior to this, the departments of Communications and Journalism resided under the College of Liberal Arts and Sciences. During the early-to-mid-twentieth century, there was a School of Journalism.