In a small microwaveable bowl, melt chocolate chips, peanut butter, and butter uncovered for 1 minute. Stir. Continue to microwave in 30 second intervals, stirring in between, until just melted. Stir in vanilla. Pour the mixture over the cereal and stir to coat. Pour into a 2 gallon resealable food-storage bag.
Add the powdered sugar. Seal the bag. Shake until the cereal is well coated. Store in the refrigerator or at room temperature.