Danny Mijovic stood at 4 under par through 16 holes when play was called for darkness on the Fazio Foothills Course at Barton Creek Resort.
Butcher struggled early with bogeys on each of his first two holes but he managed to respond with birdies at the third and the fifth.
The 34-year-old then birdied three in a row starting at the par-4 seventh to make the turn at 3 under.
Butcher faltered with a bogey at the 10th but he countered with a birdie at the very next hole.
Butcher, who won last year's Bay Mills Open Players' Championship, closed in style with birdies on each of his last three holes to move to the top of the leaderboard.
'I managed to scrape it around today after a slow start,' said Butcher. 'Everything seemed to come together today. I made some big putts and had some good bounces which I took advantage of. Even when I hit bad shots, I was able to get out of it.'
McMillan collected six birdies and a bogey for his round of 67.
'I was definitely rusty out there today, but sometimes you play smarter in that situation,' said McMillan. 'I've been working on my game a lot, and I'm feeling pretty good, but it's early in the year.'
Keith Fergus, Tyler Erickson, Paul Danielson, Bryan Conway, Jason Schultz, Wes Heffernan, Kris Mikkelsen, Brad Sutterfield and Chris Greenwood are all in the clubhouse at 2-under-par 70.
Defending champion Anders Hultman is six shots behind Butcher after a round of 72.
Justin Peters, the winner of The Golf Channel's reality television series 'The Big Break,' managed a 3-over-par 75 in his debut on the Canadian Tour.