Grease a medium sized baking pan well (I use Pam spray)
Mix sugar, milk, butter and vanilla in a 2 1/2 quart pot.
Heat over medium until boiling.
Turn down to low heat and continue to boil while stirring constantly for 5 minutes.
Turn off heat.
Add marshmallows a few at a time until completely melted.
Add chips in small handfuls until completely melted.
Pour into pan and cool.
Cut into 1 inch x 1 inch squares when completely cool.
Variations: you can use just about any kind of chip - I've found peanut butter chips are very good, so are mint. If the package comes in 10 ounce sizes, add 2 ounces of plain chocolate chips instead, it helps make the fudge a little firmer. You can also add nuts. If making in very humid areas, allow marshmallows to sit out overnight before cooking - this makes them slightly stale and helps the fudge firm up.