Powdered sugar is a troublesome ingredient. Unless you make a lot of frosting, you either don't keep it on hand or the package you do have is way past its expiration date. If you have food allergies or are keeping kosher for Passover, the small percentage of corn starch in powdered sugar is problematic. Depending on the reason you need a replacement, there are plenty of alternatives to using powdered sugar in frosting.
Make Your Own
The standard substitution for powdered sugar is to whir a cup of granulated sugar plus a tablespoon of corn starch in a blender. If you're avoiding corn starch, use potato, tapioca or arrowroot starch instead, depending on your diet restrictions. With a good blender and enough time, these replacements will probably go unnoticed. As with most recipe substitutions, however, your results may vary.
Make Another Type of Frosting
Although many require cooking, you can make delicious frosting with granulated or brown sugar as well. If you're after something light and fluffy, try a seven-minute frosting. You can also make a buttercream-style frosting without the powdered sugar by adding a cooked milk-and-flour mixture to creamed butter and sugar, and then beat as usual.
Slim It Down
If you simply want to replace powdered sugar with something less fattening, check the websites of sugar substitute manufacturers for frosting recipes. You can also make a sugar-free replacement for powdered sugar by whirring two parts each of non-fat dry milk and corn starch with one part sugar substitute in a blender or food processor. Again, if you're on a diet restricting corn, use potato, tapioca or arrowroot starch instead.
Try Something Different
Powdered sugar frosting may look light and fluffy, but it's still sugar and fat, albeit whipped into a delightfully tasty package. Like all treats, it has its place. For healthier options, try using a sugar-free, low-fat whipped topping instead of frosting, or make "cream cheese" frosting using strained low-fat yogurt.