In a large saucepan, combine sugar, milk, vanilla, and butter.

Bring to a boil over medium high heat, stirring constantly. Once boiling, keep at a rolling boil for a full two minutes (still stirring).

For this next step, I use a stand mixer with whisk attachment (a hand mixer would work too). Combine the marshmallow cream and milk chocolate chips in mixing bowl. Pour hot mixture over these ingredients and blend until smooth. I turn my mixer on medium speed and blend for 1-3 minutes, scraping down sides of bowl as needed.

While this is mixing, line an 8-inch square baking dish with parchment paper. Set aside.

Once mixture is smooth, fold in 1 1/4 cup of the macadamia nuts. Pour into prepared dish and press remaining 1/2 cup nuts on top of fudge, pressing lightly. Refrigerate for 4 hours, or overnight. Cut and enjoy.

Store fudge in airtight container for up to 1 week.