In a medium bowl, beat the softened cream cheese until completely smooth and no lumps remain.

Mix in powdered sugar and vanilla extract. Blend until thick and fully combined.

Gently fold in the thawed whipped topping with a spatula until light and fluffy—don’t overmix.

Divide the mixture into separate bowls. Tint each with a drop or two of food coloring. Swirl gently for a marbled effect or layer for colorful stripes.

Carefully fold in pastel sprinkles, mixing just enough to keep colors from bleeding.

Spoon into a serving bowl, smooth the top, and sprinkle extra sprinkles on top. Chill for at least 30 minutes before serving.