Preheat Oven:
Preheat oven to 350°F (175°C). Grease and flour two 9-inch round cake pans.

Make Cake Batter:
In a large bowl, combine cake mix, peanut butter, oil, eggs, and water. Beat on medium speed until smooth. Fold in 1 cup M&M’s gently.

Bake:
Divide batter evenly between prepared pans. Bake for 25–30 minutes or until a toothpick inserted in the center comes out clean.

Cool:
Let cakes cool in pans for 10 minutes, then remove to wire racks to cool completely.

Prepare Frosting:
In a bowl, beat softened butter and peanut butter until creamy. Gradually add powdered sugar, then milk and vanilla extract, beating until fluffy.

Assemble Cake:
Spread frosting on top of one cake layer, place the second layer on top, and frost the entire cake. Decorate with remaining M&M’s if desired.