Melt the butter in a sauce pan. Stir in the chocolate chips and peanut butter and stir constantly until mixture is liquefied and well combined. Remove from heat.
Using a gallon sized plastic bag, pour about half of the Chex cereal into it. Drizzle about half of the melted chocolate mixture over the cereal. Close the bag and give it a good shake until the Chex pieces are coated in the chocolate.
Once cereal is coated, scoop about half of the powdered sugar over the Chex, close the top and give it another good shake. Add powdered sugar as needed until the Puppy Chow resembles the consistency you want it. Repeat with remaining ingredients.