Preheat the oven to 350 F. In a large bowl, combine butter with peanut butter and powdered sugar. Mix until it is fluffy. Add in the vanilla extract, and mix until smooth.
Add in the flour, and mix until it is fully combined. Roll the cookie dough into balls, and place at least 2-inches apart onto ungreased baking sheets. Bake for 10-12 minutes.
Place the remaining 1/2 cup powdered sugar into a shallow dish. Roll each baked cookie into the powdered sugar. Let cool completely on cooling racks.