The cabin exists in a rural area off of Forest Road (FR) 245, just to the west of its intersection with Arizona State Route 373. In 1911, the U.S. Forest Service declared the area which includes the property where Butterfly Lodge sits as a protected area. As part of a program which encouraged U.S. citizens to develop public lands, a long-term lease was issued to Schultz by the local forest ranger. Schultz financial success as a writer and explorer enabled him to build the first cabin by a non-resident in the remote White Mountains. Two men from nearby Greer, Arizona, John T. Butler and Cleve Wiltbank, built the cabin in 1913, intending to be used by James Willard Schultz as a hunting lodge and retreat. The men used ponderosa pine and Douglas fir to build the cabin. Schultz son, Hart Merriam Schultz (also known as Lone Wolf), later put additions on the structure, including an artist's studio. The site was a clearing near a spring, purported to be the headwaters of the Little Colorado River. The plethora of butterflies in the area was the impetus for the name of the cabin. Between 1916 and 1929 three additions were made to the structure, including a bedroom and storage area, an artist's studio, and a kitchen.