Set out cream cheese and butter and allow it to warm to room temperature.
Sift the powdered sugar.
Cream together room tempature cream cheese and butter. Scrape down bowl and make sure there are absolutely no lumps.
Melt chocolate in microwave- 30 seconds at 50% power. Stir well. Microwave in additional 15 second increments, stirring every time, until melted. Do NOT overheat. Allow to cool slightly.
Add melted chocolate and vanilla to cream cheese and butter. Mix well.
Add sugar gradually, beating well, until light and fluffy after each addition. Add sugar to desired sweetness; may not use all of the sugar.