The former Inverness Caledonian Thistle boss was handed a £1,000 fine and a two-match ban - one game of which is suspended until the end of the season - by a Scottish Football Association disciplinary tribunal on Thursday.
But following the appeal, he is free to now take his place in the technical area in Paisley as he starts his Hibs tenure with an away trip west.
Butcher's punishment stems from an incident which saw him sent to the stand during his former club's League Cup win over Dundee United last month.
The former England captain admitted a charge of misconduct by "acting in an aggressive manner towards players of the opposing team".
The then-Caley Thistle manager and United coach Darren Jackson, whose hearing was postponed, were dismissed following the on-field melee which also saw United forward Nadir Ciftci sent off. Ciftci saw his red card rescinded but faces further action over an alleged attack on an assistant referee.
A statement by Hibs confirmed they hoped to overturn their new boss' ban.
It said: "Hibernian can confirm an appeal has been lodged against the decision by disciplinary tribunal notified against Terry Butcher on 21 November 2013. The appeal has been lodged as per the Procedural Rules For Appeals Proceedings as set down in the Judicial Panel Protocol.
"Butcher will now take charge of tomorrow's game with the suspension on hold, subject to the appeal."
You can see how the Hibees fare with Butcher in the dugout live on Sky Sports 3HD from 12.30pm on Saturday.