In a microwave-safe bowl, combine chocolate chips, peanut butter, and butter. Microwave in 30-second intervals, stirring in between, until melted and smooth. Stir in vanilla extract.
Pour the melted chocolate mixture over the cereal and gently toss to coat evenly.
Place the powdered sugar in a large resealable bag. Add the chocolate-covered cereal to the bag and shake until completely coated with powdered sugar.
Spread the puppy chow on a baking sheet to cool completely. Store in an airtight container.
Notes
For a variation, try using white chocolate chips or adding sprinkles.