An undergarment with powder dispenser and method of use. A powder dispenser is attached to an undergarment torso rear. Powder is placed within the powder dispenser and diffuses through a powder-permeable powder dispenser front wall onto the skin of a user wearing the undergarment with powder dispenser. The powder dispenser extends downwards from an undergarment torso waist substantially 80% of the way to an undergarment crotch. A powder dispenser rear wall top edge elastic keeps powder within the powder dispenser from escaping. Downwardly-sloping powder dispenser baffles extend alternatingly from powder dispenser rear wall side edges, creating a serpentine powder path to improve powder distribution. Method of use steps include inserting anti-chaffing powder through a powder dispenser mouth and into a powder dispenser reservoir, and then allowing it to diffuse through the powder dispenser front wall onto the wearer, thus helping avoid skin irritation in the buttock, crotch, and thigh areas.