Traditional ghee is produced from the milk of buffalo indigenous to the regions of India and Pakistan, but it can also be made from any other milk-producing animal. The process begins with the standard butter created through the churning of milk fats, solids and water. This butter still contains a significant amount of moisture, which must be boiled off to create a clarified butter.

Sticks of pure butter are placed in a large saucepan or kettle over medium to high heat. As the butter melts, it begins to boil. The solids settle to the bottom, while a thicker layer of oil forms in the center. The excess water forms a foamy top layer as it boils away.

Once the boiling process has slowed considerably, the middle layer should have a golden brown appearance. This is the clarified butter or ghee. The preparer carefully spoons off this layer, making sure not to disturb the layer of solids on the bottom. The ghee is allowed to cool in an air-tight canister, similar to a solid vegetable shortening or animal-based lard. Ghee can be reheated for deep frying or drizzled over dishes like a syrup or sauce.

Ghee is considered a saturated fat, since it is derived from animals. Nevertheless, some studies suggest that it is healthier overall than traditional Western fats such as lard and margarine. Ghee uses a natural process to maintain stability without refrigeration, unlike the hydrogenated and partially-hydrogenated vegetable oils used in Western cooking.