Into large bowl, measure cereal and set aside.

In 1-quart microwavable bowl, microwave chocolate chips, peanut butter and butter uncovered on high 1 minute; stir. Microwave about 30 seconds longer or until mixture can be stirred smooth. Stir in vanilla. Pour mixture over cereal, stirring until evenly coated. Pour into 2-gallon resealable food-storage plastic bag.

Add powdered sugar. Seal bag; shake until well coated. Spread on waxed paper to cool. Store in airtight container.