Between the Honduran campaign and his next assignment, he returned to Philadelphia. He married Ethel Conway Peters of Philadelphia in Bay Head, New Jersey, on June 30, 1905. His best man at the wedding was his former commanding officer in China, Lieutenant Colonel Littleton W.T. Waller. The couple would have three children: a daughter, Ethel Peters Butler, and two sons, Smedley Darlington, Jr. and Thomas Richard.

After the Honduras campaign, Butler was assigned to garrison duty in the Philippines, where he once launched a resupply mission across the stormy waters of Subic Bay after his isolated outpost ran out of rations. He was diagnosed as having a nervous breakdown in 1908, and received nine months sick leave for which he returned home. He found work as a coal miner in West Virginia, but did not find mining to his taste, and returned to active duty in the Marine Corps.

From 1909 to 1912, he served in Nicaragua, enforcing U.S. policy, and once again led his battalion to the relief of a rebel besieged city, this time Granada, and again, with a 104 degree fever. In December 1909, he commanded the 3d Battalion, 1st Marine Regiment, on the Isthmus of Panama. On August 11, 1912, he was temporarily detached to command an expeditionary battalion with which he participated in the bombardment, assault and capture of Coyotepe Hill, Nicaragua, in October 1912. He remained in Nicaragua until November 1912, when he rejoined the Marines of 3d Battalion, 1st Marine Regiment, at Camp Elliott, Panama.

Butler and his family were living in Panama in January 1914 when he was ordered to report as the Marine officer of a battleship squadron massing off the coast of Mexico, near Veracruz, to monitor a revolutionary movement. He did not like leaving his family and the home they had established in Panama and he intended to request orders home as soon as he determined he was not needed.

On March 1, 1914, Butler and Admiral Frank Fletcher went ashore in Veracruz and made their way to Jalapa, Mexico, and back. A purpose of the trip was to allow Butler and Fletcher to discuss the details of a future expedition into Mexico. Fletcher's plan required Butler to make his way into the country and develop a more detailed invasion plan while inside its borders. It was a spy mission and Butler was enthusiastic to get started. When Admiral Fletcher explained the plan to the commanders in Washington, D.C., they agreed to it. Butler was given the go-ahead. He entered Mexico and made his way to the U.S. Consulate in Mexico City, posing as a railroad official named "Mr. Johnson". He and the chief railroad inspector scoured the city, claiming to be searching for a lost railroad employee; there was no lost employee, in fact the employee they claimed was lost never existed. The ruse gave Butler access to various areas of the city. In the process of the so-called search, they located weapons in use by the Mexican army, and determined the sizes of units and states of readiness. They updated maps and verified the railroad lines for use in an impending US invasion. On March 7, 1914, he returned to Veracruz with the information he had gathered and presented it to his commanders. The invasion plan was eventually scrapped when authorities loyal to Victoriano Huerta detained a small American naval landing party in Tampico, Mexico, which became known as the Tampico Affair.

When President Woodrow Wilson discovered that an arms shipment was about to arrive in Mexico, he sent a contingent of Marines and sailors to Veracruz to intercept it on April 21, 1914. Over the next few days, street fighting and sniper fire posed a threat to Butler's force, but a door-to-door search routed out most of the resistance. By April 26, the landing force of 5,800 Marines and sailors secured the city, which they held for the next six months. By the end of the conflict, the Americans reported 17 dead and 63 wounded and the Mexican forces had 126 dead and 195 wounded. After the actions at Veracruz, the United States decided to minimize the bloodshed and changed their plans from a full invasion of Mexico to simply maintaining the city of Veracruz. For his actions on April 22, Butler was awarded his first Medal of Honor. The citation reads:

For distinguished conduct in battle, engagement of Vera Cruz, 22 April 1914. Major Butler was eminent and conspicuous in command of his battalion. He exhibited courage and skill in leading his men through the action of the 22d and in the final occupation of the city.

After the occupation of Veracruz, many military personnel received the Medal of Honor, an unusually high number that diminished somewhat the prestige of the award. The Army presented one, nine went to Marines and 46 were bestowed upon Navy personnel. During World War I, Butler, then a major, attempted to return his Medal, explaining he had done nothing to deserve it. The medal was returned with orders to keep it and to wear it as well.

In 1915, rebel Haitians known as Cacos killed the Haitian dictator Vilbrun Guillaume Sam. In response, the United States ordered the USS Connecticut to Haiti with Major Butler and a group of Marines on board. On October 24, 1915, 400 Cacos ambushed Butler's patrol of 44 mounted Marines when they approached Fort Dipitie. The Marines maintained their perimeter throughout the night. The next morning, they charged the much larger enemy force from three directions. The startled Haitians fled, thinking that the Marines had a much larger force. By mid November 1915, most of the Cacos had been captured or killed and the insurgency generally suppressed, except for a small force of 200 Cacos at Fort Rivière, an old French built stronghold deep in the country. Fort Rivière sat atop Montagne Noire, with its front reachable only by a steep, rocky slope; the other three sides fell away so sharply that an approach from those directions was considered to be impossible. Some Marine officers argued that it should be assaulted by a regiment supported by artillery, but Butler convinced his colonel to allow him to attack with just four companies of 24 men each, plus two machine gun detachments.

For the operation, Butler was given only three companies of Marines and some sailors from the USS Connecticut. They encircled the fort, and gradually closed in on it. Butler reached the fort from the southern side with the 15th Company and found a small opening in the wall. The Marines entered through the opening and engaged the Cacos in hand-to-hand combat. He and the Marines took the rebel stronghold on November 17, 1915, an action for which he received his second Medal of Honor, as well as the Haitian Medal of Honor. Only one Marine was injured in the assault when he was struck by a rock and lost two teeth. Butler's exploits impressed then Assistant Secretary of the Navy Franklin D. Roosevelt, who recommended the award based upon Butler's performance during the engagement in which all 200 Cacos were killed. Once the medal was approved and presented in 1917, Butler achieved the distinction, shared with Dan Daly, of being the only Marines to receive the Medal of Honor twice for separate actions. The citation reads:

For extraordinary heroism in action as Commanding Officer of detachments from the 5th, 13th, 23d Companies and the Marine and sailor detachment from the U.S.S. Connecticut, Major Butler led the attack on Fort Riviere, Haiti, 17 November 1915. Following a concentrated drive, several different detachments of Marines gradually closed in on the old French bastion fort in an effort to cut off all avenues of retreat for the Caco bandits. Reaching the fort on the southern side where there was a small opening in the wall, Major Butler gave the signal to attack and Marines from the 15th Company poured through the breach, engaged the Cacos in hand-to-hand combat, took the bastion and crushed the Caco resistance. Throughout this perilous action, Major Butler was conspicuous for his bravery and forceful leadership.

Subsequently, as the initial organizer and commanding officer of the Haitian Gendarmerie, the native police force, Butler established a record as a capable administrator. Under his supervision, social order, administered by the dictatorship, was largely restored and many vital public works projects were successfully completed. He recalled later that, during his time in Haiti, he and his troops "hunted the Cacos like pigs."

During World War I, to his disappointment, Butler was not assigned to a combat command on the Western Front. He made several requests for a posting in France, writing letters to his personal friend, Major General Wendell Cushing Neville, who was at the time assistant to the then Commandant of the Marine Corps, Lieutenant General John A. Lejeune. While Butler's superiors considered him brave and brilliant, they described him as "unreliable."

In October 1918, he was promoted to the rank of brigadier general at the age of 37 and placed in command of Camp Pontanezen at Brest, France, a debarkation depot that funneled troops of the American Expeditionary Force to the battlefields. The camp had been plagued by horribly unsanitary, overcrowded and disorganized conditions. U.S. Secretary of War Newton Baker sent novelist Mary Roberts Rinehart to report on the camp. She later described how Butler tackled the sanitation issues. Butler began by solving the mud problem: "[T]he ground under the tents was nothing but mud, [so] he had raided the wharf at Brest of the duckboards no longer needed for the trenches, carted the first one himself up that four mile hill to the camp, and thus provided something in the way of protection for the men to sleep on." General John J. Pershing authorized a duckboard shoulder patch for the units. This earned Butler another nickname, "Old Duckboard." For his exemplary service he was awarded the Distinguished Service Medal of both the United States Army and Navy and the French Order of the Black Star.

The citation for the Army Distinguished Service Medal states:

The President of the United States of America, authorized by Act of Congress, July 9, 1918, takes pleasure in presenting the Army Distinguished Service Medal to Brigadier General Smedley Darlington Butler, United States Marine Corps, for exceptionally meritorious and distinguished services to the Government of the United States, in a duty of great responsibility during World War I. Brigadier General Butler commanded with ability and energy Pontanezen Camp at Brest during the time in which it has developed into the largest embarkation camp in the world. Confronted with problems of extraordinary magnitude in supervising the reception, entertainment and departure of the large numbers of officers and soldiers passing through this camp, he has solved all with conspicuous success, performing services of the highest character for the American Expeditionary Forces.

The citation for the Navy Distinguished Service Medal states:

The President of the United States of America takes pleasure in presenting the Navy Distinguished Service Medal to Brigadier General Smedley Darlington Butler, United States Marine Corps, for exceptionally meritorious and distinguished services in France, during World War I. Brigadier General Butler organized, trained and commanded the 13th Regiment Marines; also the 5th Brigade of Marines. He commanded with ability and energy Camp Pontanezen at Brest during the time in which it has developed into the largest embarkation camp in the world. Confronted with problems of extraordinary magnitude in supervising the reception, entertainment and departure of large numbers of officers and soldiers passing through the camp, he has solved all with conspicuous success, performing services of the highest character for the American Expeditionary Forces.

Following the war, he became Commanding General of the Marine Barracks at Marine Corps Base Quantico, Virginia. At Quantico, he transformed the wartime training camp into a permanent Marine post. During a training exercise in western Virginia in 1921, he was told by a local farmer that Stonewall Jackson's arm was buried nearby, to which he replied, "Bosh! I will take a squad of Marines and dig up that spot to prove you wrong!" Butler found the arm in a box. He later replaced the wooden box with a metal one, and reburied the arm. He left a plaque on the granite monument marking the burial place of Jackson's arm; the plaque is no longer on the marker but can be viewed at the Chancellorsville Battlefield visitor's center.

From 1927 to 1929, Butler was commander of the Marine Expeditionary Force in China and, while there, cleverly parlayed his influence among various generals and warlords to the protection of U.S. interests, ultimately winning the public acclaim of contending Chinese leaders. When Butler returned to the United States in 1929 he was promoted to major general, becoming, at age 48, the youngest major general of the Marine Corps. He directed the Quantico camp's growth until it became the "showplace" of the Corps. Butler won national attention by taking thousands of his men on long field marches, many of which he led from the front, to Gettysburg and other Civil Warbattle sites, where they conducted large scale re-enactments before crowds of distinguished spectators.

In 1931, he publicly recounted gossip about Benito Mussolini in which the dictator allegedly struck a child with his automobile in a hit-and-run accident. The Italian government protested and President Hoover, who strongly disliked Butler, forced Secretary of the Navy Charles Francis Adams III to court-martial him. Butler became the first general officer to be placed under arrest since the Civil War. He apologized to Secretary Adams and the court martial was canceled with only a reprimand.

At the urging of Butler's father, in 1924, the newly elected mayor of Philadelphia W. Freeland Kendrick asked him to leave the Marines to become the Director of Public Safety, the official in charge of running the city's police and fire departments. Philadelphia's municipal government was notoriously corrupt and Butler initially refused. Kendrick asked President Calvin Coolidge to intervene. Coolidge contacted Butler and authorized him to take the necessary leave from the Corps. At the request of the President, Butler served in the post from January 1924 until December 1925. He began his new job by assembling all 4,000 of the city police into the Metropolitan Opera House in shifts to introduce himself and inform them that things would change while he was in charge. He replaced corrupt police officers and, in some cases, switched entire units from one part of the city to another, undermining local protection rackets and profiteering.

Within 48 hours of taking over, Butler organized raids on more than 900 speakeasies, ordering them padlocked and, in many cases, destroyed. In addition to raiding the speakeasies, he also attempted to eliminate other illegal activities: bootlegging, prostitution, gambling and police corruption. More zealous than he was political, he ordered crackdowns on the social elite's favorite hangouts, such as the Ritz - Carlton and the Union League, as well as on drinking establishments that served the working class. Although he was effective in reducing crime and police corruption, he was a controversial leader. In one instance he made a statement that he would promote the first officer to kill a bandit and stated, "I don't believe there is a single bandit notch on a policeman's guns [sic] in this city, go out and get some." Although many of the local citizens and police felt that the raids were just a show, the raids continued for several weeks.

He implemented programs to improve city safety and security. He established policies and guidelines of administration, and developed a Philadelphia police uniform that resembled that of the Marine Corps. Other changes included military style checkpoints into the city, bandit chasing squads armed with sawed-off shotguns, and armored police cars. The press began reporting on the good and the bad aspects of Butler's personal war on crime. The reports praised the new uniforms, the new programs and the reductions in crime but they also reflected the public's negative opinion of their new Public Safety director. Many felt that he was being too aggressive in his tactics and resented the reductions in their civil rights, such as the stopping of citizens at the city checkpoints. Butler frequently swore in his radio addresses, causing many citizens to suggest his behavior, particularly his language, was inappropriate for someone of his rank and stature. Some even suggested Butler acted like a military dictator, even claiming that he inappropriately used active duty Marines in some of his raids. Major R.A. Haynes, the federal Prohibition commissioner, visited the city in 1924, six months after Butler was appointed. He announced that "great progress" had been made in the city and attributed that success to Butler.

Eventually Butler's leadership style and the directness of actions undermined his support within the community. His departure seemed imminent. Mayor Kendrick reported to the press, "I had the guts to bring General Butler to Philadelphia and I have the guts to fire him." Feeling that his duties in Philadelphia were coming to an end, Butler contacted General Lejeune to prepare for his return to the Marine Corps. Not all of the city felt he was doing a bad job though and when the news started to break that he would be leaving, people began to gather at the Academy of Music. A group of 4,000 supporters assembled and negotiated a truce between him and the mayor to keep him in Philadelphia for a while longer, and the President authorized a one year extension for him.

His second year focused on executing arrest warrants, cracking down on crooked police and enforcing prohibition. On January 1, 1926, his leave from the Marine Corps ended and the President declined a request for a third extension. Butler received orders to report to San Diego and he prepared his family and his belongings for the new assignment. In light of his pending departure, Butler began to defy the Mayor and other key city officials. On the eve of his departure, he had an article printed in the paper stating his intention to stay and "finish the job". The mayor was surprised and furious when he read the press release the next morning and demanded his resignation. After almost two years in office, Butler resigned under pressure, stating later that "cleaning up Philadelphia was worse than any battle I was ever in."

In the old Marine tradition, when a Commandant retired or died, it was customary for the senior Marine Corps general to assume the position of Commandant while a new one was chosen. However, when Marine Corps commandant Major General Wendell C. Neville died July 8, 1930, Butler, at that time the senior major general in the Corps, was not appointed. Although he had significant support from many inside and outside the Corps, including John Lejeune and Josephus Daniels, two other Marine Corps generals were seriously considered for the post, Ben H. Fuller and John H. Russell. General Lejeune and others petitioned President Hoover, garnered support in the Senate and flooded then Secretary of the Navy Charles Adams's desk with more than 2,500 letters of support. With the recent death of his influential father, however, Butler had lost much of his protection from his civilian superiors. The outspokenness that characterized his run-ins with the Mayor of Philadelphia, the "unreliability" mentioned by his superiors when opposing a posting to the Western Front, and his comments about Benito Mussolini resurfaced. Going against Marine Corps tradition, the position of Commandant went to Major General Ben H. Fuller and, at his own request, Butler retired from active duty on October 1, 1931.

Even before retiring from the Corps, Butler began developing his post-Corps career. In May 1931, he took part in a commission established by Oregon Governor Julius L. Meier. The commission laid the foundations for the Oregon State Police. He began lecturing at events and conferences and after his retirement from the Marines in 1931, he took this up full time. He donated much of his earnings from his lucrative lecture circuits to the Philadelphia unemployment relief. He toured the western United States, making 60 speeches before returning for his daughter's marriage to Marine aviator Lieutenant John Wehle. Her wedding was the only time that he wore his dress blue uniform after he left the Marines.

He announced his candidacy for the U.S. Senate in the Republican primary in Pennsylvania in March 1932 as a proponent of the prohibition, known as a "dry". He allied with Gifford Pinchot, but they were defeated by Senator James J. Davis. During his Senate campaign, Butler spoke out forcefully about the veterans bonus. Veterans of World War I, many of whom had been out of work since the beginning of the Great Depression, sought immediate cash payment of Service Certificates granted to them eight years earlier via the World War Adjusted Compensation Act of 1924. Each Service Certificate, issued to a qualified veteran soldier, bore a face value equal to the soldier's promised payment, plus compound interest. The problem was that the certificates (like bonds), matured 20 years from the date of original issuance, thus, under extant law, the Service Certificates could not be redeemed until 1945. In June 1932, approximately 43,000 marchers — 17,000 of which were World War I veterans, their families, and affiliated groups, who protested in Washington, D.C., in spring and summer of 1932. The Bonus Expeditionary Force, also known as the "Bonus Army", marched on Washington to advocate the passage of the "soldier's bonus" for service during World War I. After Congress adjourned, bonus marchers remained in the city and became unruly. On July 28, 1932, two bonus marchers were shot by police, causing the entire mob to become hostile and riotous. The FBI, then known as the United States Bureau of Investigation, checked its fingerprint records to obtain the police records of individuals who had been arrested during the riots or who had participated in the bonus march. The veterans made camp in the Anacostia flats while they awaited the congressional decision on whether or not to pay the bonus. The motion, known as the Patnum bill, was decisively defeated, but the veterans stayed in their camp. Butler arrived with his young son Thomas, in mid July the day before the official eviction by the Hoover administration. He walked through the camp and spoke to the veterans; he told them that they were fine soldiers and they had a right to lobby Congress just as much as any corporation. He and his son spent the night and ate with the men, and in the morning Butler gave a speech to the camping veterans. He instructed them to keep their sense of humor and cautioned them not to do anything that would cost public sympathy. On July 28, army cavalry units led by General Douglas MacArthur dispersed the Bonus Army by riding through it and using gas. During the conflict several veterans were killed or injured and Butler declared himself a "Hoover-for-Ex-President-Republican".

He became widely known for his outspoken lectures against war profiteering, U.S. military adventurism, and what he viewed as nascent fascism in the United States.

In December 1933, Butler toured the country with James E. Van Zandt to recruit members for the Veterans of Foreign Wars (VFW). He described their effort as "trying to educate the soldiers out of the sucker class." In his speeches he denounced the Economy Act of 1933, called on veterans to organize politically to win their benefits, and condemned the FDR administration for its ties to big business. The VFW reprinted one of his speeches with the title "You Got to Get Mad" in its magazine Foreign Service. He said: "I believe in... taking Wall St. by the throat and shaking it up." He believed the American Legion was controlled by banking interests. On December 8, 1933, explaining why he believed veterans' interests were better served by the VFW than the American Legion, he said: "I said I have never known one leader of the American Legion who had never sold them out – and I mean it."

In addition to his speeches to pacifist groups, he served from 1935 to 1937 as a spokesman for the American League Against War and Fascism. In 1935 he wrote the exposé War Is a Racket, a trenchant condemnation of the profit motive behind warfare. His views on the subject are summarized in the following passage from a 1935 issue of the socialist magazine Common Sense:

I spent 33 years and four months in active military service and during that period I spent most of my time as a high class thug for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902 – 1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.

In November 1934, Butler alleged the existence of a political conspiracy of Wall Street interests to overthrow President Roosevelt, a series of allegations that came to be known in the media as the Business Plot. A special committee of the House of Representatives headed by Representatives John W. McCormack of Massachusetts and Samuel Dickstein of New York, who was later revealed to have been a paid agent of the NKVD, heard his testimony in secret. The McCormack - Dickstein committee was a precursor to the House Committee on Un-American Activities.

In November 1934, Butler told the committee that a group of businessmen, claiming to be backed by a private army of 500,000 ex-soldiers and others, intended to establish a fascist dictatorship. Butler had been asked to lead it, he said, by Gerald P. MacGuire, a bond salesman with Grayson M–P Murphy & Co. The New York Times reported that Butler had told friends that General Hugh S. Johnson, a former official with the National Recovery Administration, was to be installed as dictator. Butler said MacGuire had told him the attempted coup was backed by three million dollars, and that the 500,000 men were probably to be assembled in Washington, D.C., the following year. All the parties alleged to be involved, including Johnson, said there was no truth in the story, calling it a joke and a fantasy.

In its report, the committee stated that it was unable to confirm Butler's statements other than the proposal from MacGuire, which it considered more or less confirmed by MacGuire's European reports. No prosecutions or further investigations followed, and historians have questioned whether or not a coup was actually close to execution, although most agree that some sort of "wild scheme" was contemplated and discussed. The news media initially dismissed the plot, with a New York Times editorial characterizing it as a "gigantic hoax". When the committee's final report was released, the Times said the committee "purported to report that a two month investigation had convinced it that General Butler's story of a Fascist march on Washington was alarmingly true" and "... also alleged that definite proof had been found that the much publicized Fascist march on Washington, which was to have been led by Major. Gen. Smedley D. Butler, retired, according to testimony at a hearing, was actually contemplated".

The McCormack-Dickstein Committee confirmed some of Butler's accusations in its final report. "In the last few weeks of the committee's official life it received evidence showing that certain persons had made an attempt to establish a fascist organization in this country... There is no question that these attempts were discussed, were planned, and might have been placed in execution when and if the financial backers deemed it expedient."

In June 1940, Butler checked himself into the hospital after becoming sick a few weeks earlier. His doctor described his illness as an incurable condition of the upper gastro-intestinal tract that was probably cancer. His family remained by his side, even bringing his new car so he could see it from the window. He never had a chance to drive it. On June 21, 1940, Smedley Butler died in the Naval Hospital in Philadelphia.

The funeral was held at his home, attended by friends and family as well as several politicians, members of the Philadelphia police force and officers of the Marine Corps. He was buried at Oaklands Cemetery in West Chester, Pennsylvania. Since his death in 1940, his family has maintained his home as it was when he died, including a large amount of memorabilia he had collected throughout his varied career.