The phrase was first recorded in 1530 in John Palsgrave's Lesclarcissement, one of the earliest French grammars written for English speakers: "He maketh as thoughe butter wolde nat melte in his mouthe."
In 1546 the saying was recorded in John Heywood's book of proverbs: "She looketh as butter wouldn't melt in her mouth."
In 1738, in Jonathan Swift's Polite Conversation: "She looks as if butter wouldn't melt in her mouth but I warrant, cheese won't choak her."
The saying refers to someone acting cool, demure, and proper, as to keep butter from melting. However, it has a negative connotation that the person is overly demure and insincere.