In this study, the inhibition of ammonia on anaerobic digestion of butyric acid was evaluated and the potential alleviating effects of such ammonia inhibition by the addition of magnetite particles were investigated. Independent anaerobic batch tests fed with butyric acid as a sole organic source were conducted in twenty 60-mL glass bottles with 10 different treatment conditions, comprising ammonia: 0.5, 2.0, 4.0, 6.0, and 7.0 g total ammonia nitrogen (TAN)/L and magnetite particles: 0 mM and 20 mM. The increase in ammonia concentration did not cause significant inhibition on methane yield; however, a significant inhibition on lag time and specific methane production rate was observed. The IC50 in the control treatments (without magnetite addition) was estimated as 6.2654 g TAN/L. A similar inhibition trend was observed in magnetite-added treatments; however, the inhibition effect by ammonia was significantly alleviated in lag time and specific methane production rate when compared to those in the control treatments. The lag time was shortened by 1.6–46.3%, specific methane production rate was improved by 6.0–69.0%. In the magnetite-added treatments, IC50 was estimated as 8.5361 g TAN/L. This study successfully demonstrated the potential of magnetite particles as an enhancer in anaerobic digestion of butyric acid under conditions of ammonia stress.