The Hibernian boss was contesting a two-game suspension - one of which was suspended - he received last month for breaching rule 203 in a game against Dundee United in October when he was still in charge of Inverness.
The former England skipper was sent to the stand during Caley's Scottish League Cup clash after a touchline bust-up which also resulted in Tannadice coach Darren Jackson being sent off.
Butcher admitted a charge at a disciplinary tribunal on November 21 of "misconduct by failing to behave in a responsible manner by acting in an aggressive manner towards players of the opposing team" but appealed against the sentence which allowed him to be in the dugout for his first game in charge of Hibs against St Mirren in Paisley on November 23.
The SFA confirmed that the Hibs manager's appeal had been "partially successful", adding: "Fine of B£1,000 quashed. Two-match suspension remains: one-match immediate and one-match suspended until the end of the Season 2013/14, and to take effect in the event that Mr Butcher is found in breach of Rule 203 during that period."
Butcher will be in the Easter Road stand for the visit of St Johnstone in the Scottish Premiership on Saturday.