In a large bowl, measure cereal and set aside.
In 1 qt microwavable bowl, microwave chocolate chips, peanut butter, and butter uncovered on High for 1 minute; stir. Microwave about 30 seconds longer or until the mixture is smooth.
Stir vanilla into the chocolate mixture.
Pour mixture over cereal, stirring until evenly coated.
Pour into a 2-gallon resealable plastic food-storage bag and add powdered sugar.
Seal the bag; shake well until well coated. Spread on waxed paper to cool.
Store in an airtight container in the refrigerator.
