Line an 8x8-inch square baking pan with parchment paper, leaving an overhang on two sides.

In a medium saucepan, combine sweetened condensed milk, chocolate chips, and butter. Heat over low, stirring continuously for about 5-7 minutes until melted and smooth.

Stir in vanilla extract to the melted mixture, mixing well until incorporated.

Gently fold in the mini marshmallows until evenly distributed, creating swirls.

Pour the mixture into the prepared pan and spread evenly with a spatula.

Allow to cool at room temperature for about 10 minutes, then transfer to the refrigerator to chill for at least 2 hours.

Once set, lift the fudge out of the pan using the parchment overhang, and slice into 16 squares.