When the British East India Company acquired Province Wellesley (Seberang Perai) in 1798, Butterworth did not exist as a settlement. It was later developed by the British. A railway station was constructed in Butterworth to transport tin ore from Taiping (then known as Larut), which was then loaded onto steam ships docked at Butterworth's wharves. The name of this town is derived from British Colonel V.T. Butterworth.
Railway passengers from George Town were transferred to the railway ferry which took them to the train.
After Malaya's independence in 1957, as part of an effort to advocate import substitution industries in the 1960s, the Penang state government under the Alliance led by Tan Sri Wong Pow Nee developed Mak Mandin as the first industrial estate in Penang.
In 1953, the Butterworth Town Board was upgraded to a town council with elected councillors. Nine years later, the Butterworth Town Council merged with the Rural District Council to form the District Council North. This also had appointed councillors since local government elections had by then been suspended.
In 1974, the Penang state government under the leadership of Tun Dr Lim Chong Eu merged all the three district councils in Seberang Perai into a management board, officially known as Lembaga Pengurusan Kerajaan Tempatan Seberang Perai. It was transformed into a municipal council in 1976 and renamed Majlis Perbandaran Seberang Perai (MPSP) following the provisions of the newly minted Local Government Act, 1976.
Besides being the seat of the local council, Butterworth also played host to many government offices and facilities, including the district police headquarters, district hospital and district office. As a result, the town boundaries were enlarged and the population grew from 3,900 in 1911 to about 43,000 in 1957. By 1980, there were 77,000 people living in Butterworth. However since then many of these government offices have been moved to Kepala Batas,
