In a microwave-safe bowl, melt milk chocolate chips; stir until smooth. Stir in the frosting, 1/2 cup peppermint chips, walnuts and extract. Cover and chill for 30 minutes or until firm enough to form into balls.
Coarsely chop remaining peppermint chips. Shape chocolate mixture into 1-in. balls; roll in chopped chips. Store in an airtight container in the refrigerator. Yield: 4 dozen.