He has been based north of the border virtually ever since, barring the odd (mainly disastrous) foray elsewhere.
Butcher remains the greatest Sassenach that Scottish football has ever known. It has been quite peculiar witnessing this scion of English football, the man once said to have the Three Lions stamped on his heart, play and manage in Glasgow, Motherwell, Inverness and now Edinburgh.
Today, in an Edinburgh derby, Butcher faces yet another major battle as he strives to keep flagging Hibernian in the top flight. Last November, when he took charge, few envisaged it would come to this. Yet Butcher's whole career in Scotland was predicated on risk.
He said: "It was a big gamble when I signed for Rangers back in 1986 - and I certainly never thought I'd be here off and on for the next 27 years. Ipswich had gone down that season [1985-86] and I was due to go to the World Cup in Mexico with England. Bobby Ferguson, our manager [at Ipswich], said, 'I'm sorry but we need to sell you, we're rebuilding the stadium', so I knew I was leaving.
"There was talk of Manchester United signing me, and Bryan Robson had spoken to me at England camps about it. But when it came to it, only one club made a concrete bid and that was Rangers. And they were paying cash up front. Graeme Souness [then the Rangers manager] was adamant, 'there are no buts about it … you're coming to Ibrox'.
"Suddenly, David Pleat phoned me out of the blue and said, 'look, just fly down to London and sign for Spurs'. But I'd done the deal. I had agreed to sign for Rangers."
During his career at Ibrox and thereafter, people often chided Butcher about the state of Scottish football. But he has tasted it in the raw, in an environment that was once the cradle of the game, and remains very defensive about his adopted homeland.
"I'm very protective of Scottish football, always have been," he says. "I used to hear all this stuff about a 'Mickey Mouse' league and whatever. But Scottish football is a hard environment to play in. You just ask any of the English guys - Gazza, Butch Wilkins, Graeme Roberts, Nigel Spackman - who have played up here. They all say the same.
"Someone said to me: 'It's a dawddle playing in Scotland.' Well, it certainly isn't - it finds you out. It strips you bare, and the fans voice their opinion pretty sharply. If they don't rate you, you soon know about it."
Butcher's managerial career has been a carnival, with many a custard pie thrown in. At the age of 31, with his game suddenly in decline but his name still up in lights, he left Rangers to take a series of disastrous player-manager jobs, starting at Coventry City in 1991. He laughs about it to this day.
"I was 31 when I went to Coventry as player-manager ... I mean, can you believe it? I took that job with no experience whatsoever - I hadn't even passed a coaching badge. The chairman at the time was John Poynton, a lovely guy. He got my number from the Lord's Taverners handbook.
"He just said to me: 'Can you come and manage my football club?' I thought: 'Yeah, I need to go for this.'
"When you are as young as I was when I became a manager, when I first went to Coventry and then Sunderland, you don't understand the complexities of it at all. You don't have the knowledge; you don't have the experience. I laugh now when I look back at me in these jobs. It was ludicrous.
"Everything has happened sort of backwards for me. I was plunged straight in as a manager; then I became an assistant-manager, then a reserve-team coach. Down and down I plummeted ... at one point [in 1997] I was actually the youth-team coach at Raith Rovers.
"It has been a bizarre managerial route for me - the highs have been high but the lows have been very low. I went to Australia in 2006 to manage Sydney FC [Butcher was sacked after nine months] and then to Brentford, where I was manager for seven months [in 2007]. Blimey, those were wretched times. But I learned a hell of a lot from these experiences."
Butcher found his mojo in the Highlands, of all places. Inverness Caledonian Thistle is big only in name: a lovely wee club in a gorgeous part of the world. Butcher transformed it, loved the life, and became a hero just a few miles from where the forces of the Duke of Cumberland - the so-called "Butcher of the Highlands" - had routed Bonny Prince Charlie's forces in a bloodbath at Culloden in 1746.
Hibs are Butcher's latest project, and he is up to his eyes in the mire, desperate to land three points against Hearts today at Easter Road. Butcher's turbulent six months in Edinburgh, not least in some of the lows, have precisely captured his erratic managerial career.
"I love being at Hibs, even though we have a huge fight on our hands," he says. "This is a big club, a proud club, and it was a fantastic opportunity for me to come here. It's a huge honour for me being here. The task, though, is enormous, as everyone can see.
"Who knows where my career will take me - look at the journey I've been on so far. Having worked at smaller clubs like Caley Thistle, where you are scraping about to save costs, and where you go and retrieve a lost ball over a hedge to save £30, you appreciate the environment of a big club, with a proper infrastructure, a good training ground and so on. People have asked me 'would you like to work again in England at some point?' Yes, I guess I would one day. But now is not the time to be dwelling on any of that. I really, really want to improve Hibs."
Butcher keeps a close eye on the English game, often being asked to do punditry for football back home, and is thoroughly depressed by the state of the English Premier League, to the point of sounding xenophobic, which Butcher insists he is not.
"I think English football is in a strait-jacket," he says. "It is being dictated to by the foreign influence: foreign owners, foreign managers, foreign coaches, foreign players. I think English football is being stifled.
"It's a bit like ... what's the name of that big weed that comes out and chokes everything? I honestly think it's like that, it just takes over: chokes the plants, chokes the flowers, it strangles the English countryside. That's how I see English football right now.
"England is a home of football. I love England. And yet, when I look at the English Premier League, there are hardly any English players in it. They should call it the Foreign Premier League - the FPL - not the EPL. I think it's really, really sad. It's a monster."
Ever the patriot, Butcher says he sees one great ray of hope, in the figure of Roy Hodgson. "The England manager's job was always, if not impossible, then one of the hardest jobs in football," he says. "But now it is even harder because of what is going on in the EPL. I really like Roy Hodgson, though. I think he's great, he's so honest; he says what he feels. I've really warmed to him, I think he's fantastic.
"It's great to see an English coach in charge of England. I got pilloried for saying that on Radio 5, but I just want the English manager to be English. I just want that English identity. Roy's from the old school, a man of respect. You half-expect him to smoke a pipe. He's bloody terrific."
Will they be saying the same of Butcher in the green half of Edinburgh later today?