Preheat the oven to 350°F and line two baking sheets with parchment paper.
In a large bowl, use an electric mixer to beat the cream cheese, butter, egg, and vanilla extract until smooth.
Stir in the cake mix until a thick dough forms.
Gently fold in the holiday sprinkles, being careful not to overmix to prevent color bleeding.
Chill the dough for at least 30 minutes to make it easier to handle.
Scoop the dough into 1½-inch balls and roll them in powdered sugar until fully coated.
Place the dough balls on the prepared baking sheets, spacing them about 2 inches apart.
Bake for 10-12 minutes, until the edges are set but the centers remain slightly soft.
Let the cookies cool on the baking sheet for a few minutes before transferring them to a wire rack to cool completely.