Place toothpick in center of each marshmallow. In medium saucepan, warm frosting over low heat until softened but not runny. Remove from heat.
Dip each marshmallow in frosting to coat, wiping off excess on inside of pan. Let dry slightly. Dip bottom half of each marshmallow in peanuts. Set peanut side down on waxed paper. Let stand until set. Remove toothpicks.