The move sends Butler to his hometown team. The 11-year NBA veteran is from nearby Racine, Wis.
The Suns acquired Butler and point guard Eric Bledsoe from the Clippers on July 10 in a three-team trade that sent the Suns' Jared Dudley and Milwaukee's J.J. Redick to Los Angeles. Milwaukee got two second-round draft picks in the deal.
Butler signed a three-year, $24 million contract with the Clippers in December 2011. A starter for the Clippers the past two seasons, Butler has averaged 15.5 points in stops that included Miami, the Los Angeles Lakers, Washington, Dallas and the Clippers.
"We're very excited to welcome Caron back home," Bucks general manager John Hammond said in a statement.
Hammond said Butler "gives us depth at the small forward position and will be a mentor for our younger players."
Suns general manager Ryan McDonough said the trade "gives us significant cap space as well as the flexibility to trade for another exciting player."
It also could provide some money that would make it easier to swallow the $9 million hit the team would take if it waives Michael Beasley, who was arrested in early August on suspicion of marijuana possession and had been a disappointment on and off the court in his one season with Phoenix. Finding someone who would take him in a trade seems unlikely, given his long history of marijuana problems.
Smith has played for five teams in three NBA seasons after making the Houston roster as an undrafted free agent in 2010. He appeared in 52 games last season, 36 with Orlando before he was traded to Milwaukee, where he played in 16 games.
The 6-foot-11 Kravtsov enters his second NBA season and will join fellow Ukrainian center Alex Len, the Suns' first-round draft pick. They are the only two Ukrainians on an NBA roster. Moments after the trade was confirmed, the Suns announced they had signed Len, the fifth overall pick in the draft.
The trade is the latest in a series of efforts by new general manager McDonough and new coach Jeff Hornacek to rebuild the Suns after the team endured its second-worst finish in franchise history.
Butler had expressed satisfaction with the role made for him in Phoenix, even serving as one of the models when the Suns unveiled their new uniforms at a local shopping mall.
But he undoubtedly will love the move back to his home area.
Butler, a two-time All-Star, started 78 games for the Clippers last season, averaging 10.4 points per game, shooting 39 percent from 3-point range.
After two seasons at UConn, Butler was selected by Miami as the 10th overall pick in the 2002 draft. His uniform numbers have been retired by the two high schools where he played, Racine Park and Maine Central Institute.