The 37-year-old will continue to coach Doncaster Rovers Belles.
Butler, who joined Rovers for a second playing spell last year, initially took interim charge for two games in November while the club's management team were in self-isolation.
The Balby-born centre-half then took charge for the rest of the season after Darren Moore left for Sheffeld Wednesday at the start of March.
Butler said: “Firstly, I’d like to thank my friends and family for always being there for me. I’d also like to thank the players who supported me through my playing time and the backroom staff and ground staff who helped me through the great experience of managing the senior team in League One.
“It’s been a tough couple of weeks for me personally.
"For my well-being and for my family, I believe the choice to leave the Doncaster Rovers and start another playing journey elsewhere is the right one at this time.
“I’m still learning in my managerial career and will continue to do so with Doncaster Rovers Belles and Nick Buxton who will help me all the way.
"People will always ask if I regret the decision to take on the Rovers manager’s job and the answer is that I don’t regret it at all.
"To have the experiences I’ve had in such a short time I think will stand me in a great stead later on. Yes, the results didn’t go as well as I’d hoped, but I promise you I gave everything and more to put things right.
“I have loved every moment of being a Rovers player and interim manager. I’m a Doncaster lad through and through and have made the journey from fan to player, to manager which no one can take away from me.
“Finally, to the fans who stick with the club no matter what, I want to say a massive thank you! This lad from Balby hopes he’s done you all proud.”