The surgery means Butler is out for the remainder of the season, according to the team.
Butler went down during a loss at Milwaukee on Saturday night. He was coming off a season-high, 30-point performance the previous game while picking up the offensive slack because of an injury to leading scorer Dirk Nowitzki.
In 29 games this season, Butler averaged 15.0 points, 4.1 rebounds and 1.6 assists and 29.9 minutes.
Butler is the team's third-leading scorer.
It could be a costly injury for Butler because he will become a free agent this summer.