Put chocolate chips and peanut butter in a large microwave-safe bowl. Microwave on high in 20–30 second bursts, stirring between bursts, until fully melted and smooth. Add vanilla and stir once combined.

Pour the Chex cereal into a large mixing bowl. Pour the melted chocolate-peanut mixture over the cereal. Gently fold with a spatula or wooden spoon until the cereal is evenly coated. Work carefully to avoid breaking the squares.

Add pretzel pieces and M&M’s. Fold in gently so the candy doesn’t melt or crack under pressure.

Transfer the coated mix to a large zip-top bag. Add the powdered sugar, seal (leave a small corner open to release air if necessary), then shake until the mix is well dusted.

Alternatively, use a large bowl with a lid.

Spread the coated mixture onto parchment paper in a single layer to cool and set, about 10–15 minutes. Once cooled, break apart any clumps and serve.