In large pan, melt butter over low heat. Add marshmallows; stir until marshmallows start to melt. Add caramels and stir until marshmallows and caramels are completely melted. Remove from heat.
Add cereal. Stir until cereal is well coated.
Using buttered spatula or wax paper evenly press mixture into 13 x 9 x 2-inch buttered pan. Cool. Cut into 2-inch squares.