In a large saucepan, over medium-low heat, melt the butter; add the peanut butter and stir until smooth. Add the chocolate chips and continue to stir until melted.

Remove from heat. Stir in vanilla.

Add Chex cereal and mix until thoroughly coated.

Place the powdered sugar in a large ziplock bag. Add the cereal-peanut butter mixture to the bag. Shake the bag gently to evenly coat each piece of the puppy chow with the powdered sugar. (You might need to divide the mixture into smaller batches, coating one batch at a time).

Transfer to a large serving bowl and stir in extra powdered sugar if necessary.