Melt butter in a medium saucepan over medium heat. Stir in garlic, onion and chicken livers. Reduce heat to low, and simmer approximately 10 minutes, until chicken livers are tender and no longer pink.
Place chicken liver mixture in a blender with dry sherry, cream cheese, hot sauce, salt and pepper. Blend until smooth. Transfer to a medium bowl, cover and chill in the refrigerator approximately 2 hours before serving.