Paleo and Dairy
Many people who live a strict Paleo lifestyle exclude butter from that lifestyle. It is technically dairy, and since dairy is a relatively recent addition to our diet (around the same time we started eating grains) many people feel better without it.
The Pros and Cons of Butter
However, people generally avoid dairy for the milk protein and sugar it contains, and butter has only nominal amounts of both. Butter is mostly saturated fat, and it comes from a natural source, so it’s actually very Paleo-friendly.
In addition to being delicious, saturated fat is actually quite healthy. It is much more stable than unsaturated fat, which means it is less likely to oxidize when exposed to heat or light. Consuming oxidized fat leads to oxidized cholesterol in our blood and that’s the stuff you want to watch out for. It is the oxidized cholesterol that latches onto the interior of our arteries, causing plaque and inflammation, both of which are very dangerous.
Nutrient Content of Butter
The key to living a Paleo lifestyle is eating nutrient-dense foods and butter definitely fits into that category. In addition to the healthy helping of fat, butter (especially grass-fed butter) comes loaded with nutrients, especially vitamin A (hence the bright orange color) and vitamin K2 (necessary for transporting calcium from our blood and to our bones).
Mark Sisson has a whole list of reasons to eat butter and why grass-fed is preferable.