Line an 8×8-inch baking dish with parchment paper, leaving extra over the sides for easy removal.
In a medium saucepan, combine the white chocolate chips and sweetened condensed milk. Stir over low heat until comptely melted and smooth.
Remove from heat and stir in vanilla extract.
Divide the mixture into three bowls. Add red food coloring to one, green to another, and leave the third plain. Stir each until evenly colored.
Pour the red mixture into the prepared pan, spreading evenly. Layer the plain mixture next, followed by the green. Swirl gently with a knife for a marbled effect if desired.
Sprinkle with holiday sprinkles while the fudge is warm. Refrigerate for at least 2 hours or until firm.
Once set, lift the fudge using the parchment paper and cut into squares.