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Preheat your oven to 350°F and line a baking sheet with parchment paper.
In a large bowl, cream the softened butter with ½ cup powdered sugar until light and fluffy. Add the vanilla extract and mix until combined.
In a separate bowl, whisk together the flour and dry pistachio pudding mix. Gradually add this to the butter mixture, mixing until a dough forms. Fold in chopped pistachios if desired.
Shape the dough into a ball, wrap it in wax paper or plastic wrap, and chill in the refrigerator for 1 hour.
Scoop out teaspoon-sized portions of the dough, shape into small balls, slightly flatten them, and place them on the prepared baking sheet.
Bake for 6 to 9 minutes, or until the edges are lightly golden. Let them cool on the baking sheet for 3 to 5 minutes.
While still warm, roll the cookies in the remaining powdered sugar. Transfer to a wire rack to cool completely.
Once cooled, store the cookies in an airtight container to maintain freshness.