Measure cereal into a large bowl and set aside.
In a 1 quart microwave safe bowl, heat chocolate chips, peanut butter, and butter for 1 minute on high heat. Stir. Microwave 30 seconds longer or until melted and smooth. Stir in vanilla.
Pour chocolate mixture over cereal and stir well to coat all pieces. Divide mixture between 2, 1-gallon resealable food-storage plastic bags.
Add 3/4 cup powdered sugar to each bag. Seal bags; shake until well coated. Spread on waxed paper or foil for about 30 minutes to cool. Store in an airtight container at room temp, or in the fridge.