Preheat the oven to 325 degrees. Line a baking sheet with parchment paper.
Cook bacon in a skillet over medium heat until golden brown; drain paper towels. Chop into bits.
Whisk together the peanut butter, milk, and egg until well combined.
In a separate bowl, combine the flour and the baking powder; mix well.
Add the flour mixture to the peanut butter mixture until combined. Add the oats and bacon bits; mix well. The dough is thick and heavy.
Working on a lightly floured surface, knead the dough 3-4 times until it comes together. Using a rolling pin, roll the dough to 1/4-inch thickness.
Use a cookie cutter to cut out desired shape and place onto the prepared baking sheet.
Place into oven and bake until the edges are golden brown, about 20-25 minutes. Remove from the oven and allow to cool completely on a wire rack.
Store in a sealed container in the refrigerator or freezer. My dog loves them right out of the freezer - especially on hot days! Enjoy.