The City of Lake Butler operates under the Council - Manager Form of government. The City Commission is elected by the voters and in turn, the Commission hires a professionally trained individual as its city manager. The city manager handles the day to day activities of the City. The City Commission makes policy decisions, and votes on all legislative or quasi-judicial matters required or enabled by state or federal law.

The City is governed by a City Charter that is approved by the Florida State Legislature and the Governor.