Many Norwich fans said Gunn had to go after last week's 7-1 home defeat to Colchester United and today they got their wish.
"The board, after lengthy consideration, unanimously felt a change was in the best interests of all parties concerned," said Norwich CEO David McNally to his club's website.
Butterworth came through the ranks at City and was sold to Nottingham Forest in the deal which also saw Stuart Pearce move to the City Ground.