Microwave chocolate in small microwavable bowl as directed on package until melted. Cool 10 minutes.
Beat powdered sugar, butter, vanilla and milk in large bowl with electric mixer on low speed until smooth. Gradually beat in melted chocolate until well blended.
Immediately frost cake. Frosting will begin to set up after about 15 minutes. Generously frosts a 13x9-inch cake, or fills and frosts an 8- or 9-inch two-layer cake.