Andrew Smith supplied 13 points and Khyle Marshall chipped in with a double-double of 10 and 11 rebounds for the Bulldogs (3-1).
Butler now advances to face Illinois in Wednesday's tournament final.
The Tar Heels (4-1) were led by P.J. Hairston with 15 points and seven boards.
Marcus Paige and Reggie Bullock also reached double figures with 13 points apiece in the loss.
Ray Liotta sues skin care company over use of likeness
Aaron Carter is still in love with Hilary Duff