Fernandes remains a target for Saudi Pro League clubs after rejecting a move last season when United were prepared to sell.
On the Portugal midfielder, Butt told The Good, The Bad & The Football podcast: "Man United cannot let him go, no matter what it costs them.
"They cannot let Bruno Fernandes go. They'll have to give him anything he wants to keep him because if they let him go the fans will go absolutely nuts."
He added: "It's no coincidence that he's now playing where he should have been playing for the last two years and he's playing unbelievably well and creating chances. His pass for the second goal (versus Villa) is an unbelievable pass.
"I think I was part of a few people who criticised him a little bit, not because of his performances and his playing but as a captain as leader because I'm old school and I look at captains like Tony Adams, Bryan Robson, Roy Keane.
"What he's always done is created and scored goals and he's carried that football team pretty much on his own for I'd say a good two years, two seasons."