Butterfield is the latest, and most serious, in a growing line of high-ranking executives to leave Yahoo! in the past weeks. He submitted an unusual resignation letter, which is now available to read on the internet.
The jokey letter, in which Butterfield compares himself to a sheet-tin metal worker, has a serious undertone which hints at serious problems within Yahoo!, which has just signed a search advertising deal with rival Google after spurning the advances of software giant Microsoft.
In the resignation letter, Butterfield said: "By the time of the internet revolution and out expansion into web sites, I have been cast adrift. I tried to roll with the times, but nary a sheet of tin has rolled of our own production lines in over 30 years."
He signs off the letter, with: "I will be spending more time with my family, tending to my small but growing alpaca herd and of course getting back to working with tin, my first love. Your old tin-smithing friend and colleague, Stewart Butterfield."
Butterfield and his wife Caterina Fake, launched Flickr, the most popular photo-sharing website on the internet, in 2004. He sold the company just a year later for $35m (£18m).
His resignation co-incided with that of three more senior executives yesterday -- Qi Lu, Brad Garlinghouse, and Vish Makhijani.
Garlinghouse is senior vice-president for communications and communities and responsible for Yahoo!'s email and messaging services, Yahoo! Groups and Flickr. He was also responsible for the highly critical memo, the Peanut Butter Manifesto.
Makhijani, who is senior vice-president of Yahoo!'s search group, is leaving to join Russian search engine Yandex. Lu is executive vice-president for the search and advertising technology group.
The departures follow a number of others and come swiftly on the heels of the collapse of the Microsoft deal to buy Yahoo!, which coupled with these senior departures has rocked Wall Street's confidence in the firm under the leadership of CEO Jerry Yang.
Ross Sandler, an analyst with RBC Capital Markets, told the New York Times: "Wall Street has lost all confidence at this point. The senior managers have clearly lost confidence in the strategy and have lost confidence in Sue and Jerry, and that's not a good thing."
The departure of Butterfield, Garlinghouse, Lu and Makhijani follows that of other senior executives, including Jeff Weiner, the executive vice-president.
Weiner quit to work at venture capital firms, alongside Usama Fayyad, the head of research. They join Jeremy Zawodny and JR Conlin, both technologists, in leaving Yahoo!.
The resignation comes amid reports that Yahoo! is planning to reorganise and centralise its mail, search and homepage divisions into a global product organisation.
The Wall Street Journal said Sue Decker, the president of Yahoo!, is behind the move, which aims to improve co-ordination between product and global sales groups.
Meanwhile, Microsoft has ruled out a buying spree in the wake of its failed bid to reach an agreement with Yahoo!.
Speculation has been rife that the company would make a series of internet acquisitions, such as Facebook, with the money it had set aside to tie up a deal with Yahoo!.
Steve Ballmer, the chief executive of Microsoft, said in an interview with the Financial Times: "People don't understand what they're talking about. At the end of the day this is about the ad platform. This is not about just any one of the applications."