Smoked Caramelized Onion Butter
Smoked Caramelized Onion Butter is your next baked potato or steak's best friend. It takes smoked and caramelized onions and combines them with high-quality butter, and then whipped to form the softest, most flavorful butter, ever.

Smoked Caramelized Onion Butter
I'm so excited about this, you guys. It seems so simple, and it is, but holy cow.
I think I just leveled up my baked potato game.
I used to HATE onions. When I was a kid, I was the kind of kid who would stop eating a meal entirely if it had chunks of onion. It really ruined the whole thing for me.
Little did I know that onions (and sushi) are actually incredible.
I don't even know how one can classify caramelized onions in the same category as raw onions. One ingredient rarely sees such an incredible transformation with so few steps and ingredients between them.
All that to say, even if you haven't historically enjoyed onions all that much, you may be surprised how many uses you could find for this caramelized onion butter.
This recipe uses my Smoked Caramelized Onions. You are going to want to put these on and in everyyyything for a while.
Why You'll Love This Dish
- Big Flavor For Almost No Work - Mix, chill, and you're done.
- Perfect For Potatoes - Melts into baked potatoes and fries like a dream.
- Steakhouse Finish At Home - Slice a coin onto hot meat and it does the rest.
- Freezer-Friendly - Easy to portion and stash for later.
- Endlessly Useful - Great on bread, veggies, rice, pasta, and grilled meats.

Recipe Shopping List
Wondering if you have to hit the store? Here's the list of items you'll need to make this recipe. For specific amounts, please refer to the printable recipe card at the bottom of the post.
- Salted Butter - Rich base that carries the onion flavor; unsalted works too, just season to taste.
- Caramelized Onions - Sweet, jammy onions that bring deep flavor; smoked caramelized onions are ideal, yet any caramelized onions work.
- Salt - Fine-tunes the seasoning; add a little at a time if your butter is already salty.
- Fresh Parsley (Optional) - Adds color and a fresh bite; chives are a great swap.
More Easy Traeger Recipes here!

How To Make This Recipe
This is just the overview so you can see what you're actually getting into here. When you are cooking, you'll want to use the full recipe at the bottom of the page.
- Soften Butter: Let butter sit at room temp until spreadable.
- Chop Onions: Rough chop caramelized onions so they mix in evenly.
- Mix: Stir onions into butter until well combined.
- Season: Mix in salt and parsley if using. Taste and adjust.
- Use Or Chill: Spread right away, or roll into a log in plastic wrap and chill until firm for slicing.

Recipe FAQ
If you don't have access to a pellet grill, you can use any kind of caramelized onions here. There are stovetop methods, crockpot methods, Instant Pot methods, all kinds of ways to make these.
I think the wood fire and smoke adds an element that can't be substituted or replaced, but the end result will still be delicious with or without it, so don't let the lack of a pellet grill in your life put you off.
But...there are some good ones available. Just sayin'.
Store this butter in the fridge, and remove it several hours before you would like to serve it. Alternatively, chill and use a melon-baller to portion out into single servings, and then freeze to store long-term.

Serve This With
The first priority I had when I made this butter was BAKED POTATOES. Not just baked potatoes, though. Smoked, steakhouse-style bakers.
You can also use compound butter on the following dishes:
- Steak
- Fish
- Seafood
- Fresh bread
- Baked potatoes
- Toasted on bread (think garlic bread but w/ caramelized onions oh.my.gosh)
- As a base to cook an omelet
- on toast? (I mean. . . . . . . . . . . maybe.)
Make my Smoked Baked Potatoes with this!

More Recipes For Onion Lovers
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Smoked Caramelized Onion Butter
This smoked caramelized onion butter is something that is so packed with flavor, you are going to wonder where it has been all of your life. This is a baked potato's perfect match, or chill it into a compound butter log and slice and put on a steak hot off the grill.
Ingredients
- 1 cup salted butter
- 1 cup chopped caramelized onions
- ½ teaspoon salt
- 1 tablespoon chopped fresh parsley *optional
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Instructions
- Chop the caramelized onions roughly and mix together with the softened butter. Stir in the salt and parsley, if using. Slather on backed potatoes, or chill and form into a roll to go on top of a freshly cooked steak.
- Use or freeze within a week for best results.
Nutrition Information:
Yield:
8Serving Size:
1Amount Per Serving: Calories: 204Total Fat: 23gSaturated Fat: 15gTrans Fat: 1gUnsaturated Fat: 7gCholesterol: 61mgSodium: 315mgCarbohydrates: 0gFiber: 0gSugar: 0gProtein: 0g
Nutrition data provided here is only an estimate.






