In a quart microwavable bowl, stir together chocolate chips, peanut butter and butter. Heat uncovered on High 1 minute; stir; Heat another 30 seconds longer or until mixture can be stirred smooth. Stir in vanilla.
Pour mixture over cereal, stirring until evenly coated. You have to work fast before chocolate hardens. Pour into a 2 gallon resealable food storage plastic bag.
Add powdered sugar, seal bag, shake until well coated. Spread on waxed paper to cool. Store in airtight container in refrigerator. It won't last long, at least not in our house.