Mrs Davidson will be minister for education and lifelong learning. She replaces Mrs Butler, pre-16 education secretary and post-16 education minister Tom Middlehurst who has resigned over the new LibLab coalition.
Rumours that Mrs Butler might go began in February when Alun Michael, the first secretary of the Assembly, was replaced by Rhodri Morgan.
Mrs Butler, a trained chiropodist, was criticised for failing to get Welsh teachers ut of the English performance pay system.
The Assembly had agreed not to link teachers' pay to pupil progress but she failed to challenge David Blunkett even after the Government's High Court defeat.
The new education minister went to Malvern Girls' College, Birmingham University and the University of Wales, and taught English, drama and PE at Ysgol Uwchradd Aberteifi Cardigan, and Coedylan School, Pontypridd.
Mrs Davidson, a Welsh speaker, was also formerly head of social affairs for the Welsh Local Government Association.