Preheat the oven to 350 F. In a large bowl, mix together butter, peanut butter and powdered sugar until smooth. Add in flour and vanilla extract until a thick dough forms. Fold in the chocolate chips.
Roll the cookie dough into balls and place onto a large ungreased baking sheet at least 2-inches apart. Bake for 10-12 minutes. Place powdered sugar into a shallow dish. Remove from the oven and roll each one into the powdered sugar.