Microwave chocolate chips, peanut butter and butter uncovered on high for 1 minute in microwaveable bowl. Stir and continue to microwave in 30 second increments longer until mixture can be stirred smooth. Stir in vanilla.
Pour mixture over cereal and stir until evenly coated. Add mixture to 2-gallon resealable food-storage plastic bag.
Add powdered sugar. Seal bag and shake until well coated.
Spread on waxed paper to cool. Sprinkle candy over mix.