Beat the butter, cream cheese and sugar together until light and fluffy, about 5 minutes. Add the flour and beat to incorporate. By hand, stir in the crushed candy cane pieces.
Roll the dough into 1-inch balls and place on foil or parchment lined cookie sheets. Make sure to leave enough room between the cookies because they will spread quite a bit while they bake.
Bake at 375 degrees for 12-15 minutes, until the edges are lightly golden and the centers are set. Cool completely on cookie sheets before removing.