Preheat the oven to 350 F. In a large bowl, combine butter with peanut butter and powdered sugar. Mix until fluffy. Add in vanilla extract, and mix until smooth.
Add in flour, and mix until it is fully combined. Fold in peanut butter cups. Roll the cookie dough into balls, and place onto a large ungreased baking sheet.
Bake for 10-12 minutes. Place the remaining powdered sugar in a shallow dish. Roll the cookies into the powdered sugar.