Inoue overcame Butler with an 11th round knockout to claim the WBO bantamweight championship belt that has been missing from his collection, and take his unbeaten streak to 24 fights including 19 title defences.
Fighting in his home country, the Japanese boxer dominated throughout and rarely looked uncomfortable - taunting Butler during the bout, including mocking him in the eighth by putting his hands behind his back.
A brutal combination in the penultimate round put Butler in danger, with Inoue then capitalising with a flurry of blows that eventually lead to the referee stepping in and ending the fight.
The win means the 29-year-old Inoue has now won belts in three weight divisions, including super-flyweight and light-flyweight.
It is widely expected that he will continue to move up the weight classes as the boxer looks to become a four-weight champion, but for now Inoue said stepping up to the super-bantamweight division "is not the goal."
"Do I feel satisfied?" Inoue asked reporters after the fight. "I am satisfied but I want to turn my mind to what comes next.
"Tonight was something great to see with the fans from where I was standing in the ring, but this is just a point along the way."
Inoue praised Butler for his "thorough game plan", despite growing frustrated at his approach.
"He tried to get through the first half and then make it a contest from the middle of the fight onwards," he said.
"I expected that but he had a good plan to stop me. I had to change my own style and try to coax him out."
Butler, whose record dropped 34-3, said he "fell just short" but paid tribute to Inoue as a "very, very good fighter."
"You can see the punches coming but sometimes you can't react quick enough to get out of the way, because he is that fast," Butler told reporters.
"That's what really good fighters do - they have good timing, good accuracy and good speed, and sometimes you just can't get out of the way of that."
