Melt the Chocolate Mixture- In a microwave-safe bowl, combine chocolate chips, peanut butter, and butter. Microwave in 30-second bursts, stirring between each, until smooth and melted. Stir in vanilla extract.

Coat the Cereal- Add Chex cereal to a large mixing bowl. Pour the melted chocolate mixture over top and gently stir until evenly coated.

Shake with Powdered Sugar- Transfer the coated cereal into a large zip-top bag or lidded container. Add powdered sugar, seal, and shake until the cereal is fully coated and no longer sticky.

Add the Festive Touches- Spread on parchment paper to cool for 10–15 minutes. Once set, toss in the red and green M&Ms — and any extras like pretzels or marshmallows.

Serve or Gift- Store in an airtight container at room temperature for up to 1 week, or divide into small jars or bags for cute, homemade holiday gifts.