Mix together sugar and cinnamon in a small bowl and set aside.
In a dutch oven, melt the butter over medium heat; stir in the vanilla extract to combine.
Add the Cheerios, stirring to completely coat in butter. Cook over medium heat about 5 minutes, stirring frequently until the cereal is nicely toasted.
Remove the pan from the heat and sprinkle the cinnamon sugar over the Cheerios and stir to completely coat.