Prepare the Ingredients: Line an 8×8-inch baking dish with parchment paper, ensuring some overhang for easy removal. Gather your food coloring and sprinkles for quick access.

Melt the Chocolate: In a medium saucepan, combine white chocolate chips and sweetened condensed milk. Heat over low, stirring constantly, until the chocolate melts and the mixture becomes smooth. Remove from heat and stir in the vanilla extract.

Divide and Color: Divide the melted mixture into three bowls. Leave one bowl plain white, and tint the other two with red and green food coloring, stirring until evenly colored.

Create the Swirls: Drop alternating spoonfuls of red, green, and white mixtures into the prepared baking dish. Use a toothpick or knife to swirl the colors together gently, creating a marbled effect without overmixing.

Decorate with Sprinkles: Sprinkle holiday-themed sprinkles over the top for added flair, if desired.

Chill and Set: Refrigerate the dish for 2–3 hours, or until the fudge is firm. Once set, use the parchment overhang to lift the fudge out of the dish.

Slice and Serve: Cut the fudge into small squares with a sharp knife. Arrange on a festive platter or package for gifting.