Because of its lack of timber and rivers, Butternut Valley was somewhat avoided by settlers in the early 1800’s. Andrew Strom, of Norway, settled his family in Butternut in 1857. About the same time, Evan Peterson and his family settled in another section of Butternut, and George W. Smith staked claims as well. While it is hard to determine who the real first settler is, Strom is generally given credit. Not many more settlers came until 1863. At this time, about two dozen more people came to the township.
Butternut Valley Township was called “Cottonwood Settlement,” but in December of 1856, Col. S. D. Shaw suggested the name “Butternut Valley,” after all the butternut trees. Until 1867, the township also included Cambria Township within its borders
The first white child was born in the township to Mr. and Mrs. Andrew Strom in 1858. The Stroms also had the first school meetings in their house. Church services were held in various homes of Norwegian settlers, but there was no official pastor, so the services did not meet very regularly. In 1882, a church building was built and named “The Norwegian Lutheran Church.”
Besides Norwegians, many Welsh people settled in Butternut Valley. Worship services and school meetings were held in private homes until 1870, when residents built their own church building. Their first pastor was Reverend D. M. Jones, who had to split his time between this church and a church in Cambria. The church members increased until the building was too small and had to be replaced in 1887.
Buildings were slow to be constructed; in 1894, a creamery was built, and that same year a post office established. It was called “Butternut” and its first postmaster was Christian Strom. By 1897, a feed mill, a blacksmith shop, a harness and shoemaker shop, a meat shop, a livery, a hotel, and a town hall had been added to the township’s buildings. Shortly after, telephone wires were put up. Though Butternut Valley started out slowly, in the early 1900s it was known as one of the most fertile areas in Blue Earth County.