Add 1 (12 ounce) Chex Cereal to a large mixing bowl and set aside.
Add 1 cup semi-sweet chocolate chips, 1/2 cup peanut butter, and 1/4 cup salted butter to a microwave-safe bowl. Heat in microwave for 1 minute, then stir and return to microwave for 30-second increments until fully melted and smooth.
Add 1 teaspoon vanilla extract to melted chocolate mixture and stir until thoroughly combined.
Pour chocolate mixture over cereal in mixing bowl and gently stir until cereal is evenly coated.
Pour chocolate-coated cereal and 1 1/2 cups powdered sugar into zip-top food storage bag. Seal the bag and shake it until the cereal is evenly coated in powdered sugar.
Line the counter (or a sheet pan) with parchment paper, then spread the cereal mixture out onto the paper. Allow to sit at room temperature for around 1/2 hour until chocolate is set.
Once cool, add cereal mixture and 1 (10 ounce) package M&M'S Holiday Milk Chocolate Candy to another zip-top storage bag, then seal and shake to combine.
Store in airtight container at room temperature for up to 3 days or in the refrigerator for up to 1 week.