Microwave chocolate chips, peanut butter, and butter in medium microwavable bowl on high for one minute; stir. Microwave 30 seconds longer or until mixture can be stirred smooth. Stir in vanilla.
Pour over cereal, stirring until evenly coated. Pour into large plastic food-storage bag; add powdered sugar. Seal bag; shake until well coated.
Spread on waxed paper to cool. Store in airtight container in refrigerator.