Butterfinger was invented by Otto Schnering in 1923. Schnering had founded near Chicago, Illinois. The company held a public contest to choose the name of this candy. In an early marketing campaign, the company dropped Butterfinger and Baby Ruth candy bars from airplanes in cities across the United States as a publicity stunt that helped increase its popularity.

 Standard Brands, Inc., purchased the Curtiss Candy Company. It then merged with Nabisco. RJR Nabisco was formed in 1985 by the merger of Nabisco Brands and R.J. Reynolds Tobacco Company. In 1988, RJR Nabisco was purchased at the time, the largest leveraged buyout in history.

Butterfinger was withdrawn from the market in Germany in 1999 because of consumer rejection when it was one of the first products to be identified as containing genetically modified ingredients from corn. Butterfinger sales ended after a successful campaign by Green peace pushed Nestlé to remove the product from German supermarkets.