Place peanut butter, chocolate chips, and butter into a microwave-safe bowl. Heat for 30 seconds and then stir. Repeat until melted and smooth. (You could also do this in a saucepan over low heat.)
Place the rice Chex in a large mixing bowl. Pour the melted peanut butter mixture over the cereal. Stir until completely coated
Transfer the cereal to a gallon-sized food storage bag. Add the powdered sugar and seal the bag. Shake until the cereal is coated in sugar.
Pour puppy chow into a serving bowl. Add in the M&Ms and marshmallows and stir to combine.
Serve immediately or store in an air-tight container until ready to enjoy.
Notes
I like to use peanut M&M's because it's kind of an egg shape. You can use any pastel-colored M&Ms or candies you like if you don't want peanuts in your puppy chow.