Butler was born in Forest Gate in East London, to Jamaican immigrant parents Milo Butler and Ambrozene Butler, into a family with one sister and four brothers. She was educated at Tom Hood School in Leytonstone and Waltham Forest College, both in London.
She worked as an officer of the GMB Union, including time as a national race and equality officer. Butler was also an adviser to the Mayor of London, Ken Livingstone, on employment and social issues.
Butler first sought selection to be the Labour candidate in Hackney South and Shoreditch, where she featured on an all-women shortlist but was unsuccessful. Butler put herself forward for selection for West Ham in 2005 but was not selected. Following the retirement of Paul Boateng to become British High Commissioner to South Africa, she was selected as the Labour candidate in Brent South and retained the seat for her party at the 2005 general election with a majority of 11,326. She was the third black woman to become a British MP after Diane Abbott and Oona King.
Interest in youth services continued as one of her main interests in Parliament. On 24 October 2006, she was appointed chair of the All Party Parliamentary Group on Youth Affairs, and she is an honorary vice president of the British Youth Council. After Gordon Brown became prime minister in June 2007, Butler was made one of the Labour Party's six vice chairs, with particular responsibility for youth issues.
She was appointed to the Select Committee on the Modernisation of the House of Commons shortly after her election, and served on standing committees. In November 2007 she was appointed to the Children & Families Select Committee. Earlier (in November 2005), she had been promoted to Parliamentary Private Secretary to the health minister Jane Kennedy, but decided to stand down from this post in early 2006.
She was promoted to Assistant Whip on 12 September 2008.
In January 2009, Butler said that an endorsement by the president of the United States, Barack Obama, had been written by her staff with the consent of his aides, before Obama signed it. Butler was named female MP of the year at the 2009 Women in Public Life awards. Following her appointment as Minister for Young Citizens and Youth Engagement, Butler became the first black woman to speak from the despatch box in the House of Commons in December 2009.
Butler's constituency of Brent South was abolished at the 2010 general election. Its territory was mostly divided between two constituencies: a new Brent Central seat and a re-drawn Brent North. Butler was selected as the Labour candidate in Brent Central but lost to Sarah Teather, the Liberal Democrat candidate, who had been the MP for Brent East which had also been abolished at the general election.
Butler was the Labour candidate for Brent Central at the general election in 2015. Prior to the election, Teather had announced she would stand down from parliament, so she did not contest the seat. Butler was returned to parliament with a majority of more than 19,000 votes.
Butler is a former chair of the Women's Parliamentary Labour Party. Following a vote in September 2016, she was succeeded by Jess Phillips.
After Jeremy Corbyn was re-elected leader in 2016, Butler was appointed as Labour's shadow minister for diverse communities in October 2016. In February 2017, she resigned from this post before the vote on the second reading in the House of Commons of European Union (Notification of Withdrawal) Bill 2017 which triggered Article 50. The vote carried a three-line whip instructing Labour MPs to vote in favour.
In March 2017, Butler used British Sign Language to ask a question in the House of Commons about giving this language legal recognition. She was reappointed as shadow minister for diverse communities in June 2017. In the same month, she launched a new cross-party parliamentary group, the Parliamentary Black Caucus, concerned with ethnic minority issues. In August 2017, following the resignation of Sarah Champion, Butler became the Shadow Minister for Women and Equalities.
In September 2018, she argued that the actions of the Militant-dominated Liverpool City Council in the early 1980s could be an inspiration for current Labour councils faced with public sector funding constraints. In October 2019, one of Corbyn's advisors accused Butler of homophobia after she claimed that "90 per cent of giraffes are gay" at the PinkNews awards.
In November 2019, Butler claimed during a radio interview that she had reduced the number of homeless people living in her constituency from 3,000 in 2007, which was two-thirds of the government's official figure for homelessness in the whole of Britain in 2018. The government's statistic for Brent in 2018 was 248. She apologised for her mistake soon after on Twitter.
Butler was reelected in the 2019 general election. Butler became the first candidate to declare candidacy in the 2020 Labour Party deputy leadership election. She has been described as one of Corbyn's "closest allies".