Butler and partner Bernard "Bun B" Freeman, who performed together as UGK (Underground Kingz), were nominated for their collaboration with hip-hop duo OutKast on the tune "Int'l Players Anthem (I Choose You)."
The recording will compete in the rap performance by a duo or group category with tracks from Common featuring Kanye West, Fat Joe featuring Lil Wayne, Shop Boyz, and a partnership among West, Nas and KRS-One.
"While this nomination is bittersweet to say the least, I am thankful for the acknowledgment," Freeman said in a statement. "And as this was a lifelong dream for Chad, it warms my heart to know that he has finally gotten the recognition from the powers that be that his talent, passion and relentless drive for music so rightfully deserved."
Butler, 33, was found dead on his bed at the Mondrian Hotel in Los Angeles on Tuesday. An official with the coroner's office said on Thursday an autopsy had been performed, but further tests are pending to determine cause of death.
UGK topped the U.S. pop album charts in August with "Underground Kingz," its first entry on the survey in five years. Butler spent much of that time in prison, serving nearly four years for aggravated assault. He was paroled in 2005.
He was not the only posthumous Grammy nominee. R&B singer Gerald Levert, who died of an accidental overdose of prescription medications last year, was cited for best traditional R&B vocal performance.
Guitarist Robert Lockwood, who died last year at 91, was nominated for best traditional blues album.
(Reporting by Dean Goodman; editing by Steve Gorman)
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