Line an 8x8 inch baking pan with parchment paper, leaving some overhang on the sides.
In a microwave-safe bowl or on the stovetop over low heat, melt the white chocolate chips and sweetened condensed milk together. Stir frequently until smooth.
Add Vanilla and Cocoa:
Stir in the vanilla extract and cocoa powder until fully combined. This gives the fudge its red velvet flavor.
Add Red Food Coloring:
Add red food coloring until the mixture reaches the desired vibrant red color. Start with a few drops and adjust as needed, considering that gel food coloring is more concentrated.
Optional: Add Nuts:
If desired, fold in chopped pecans or walnuts for added texture.
Transfer to Pan:
Pour the red velvet fudge mixture into the prepared baking pan and spread it evenly using a spatula.
Chill and Cut:
Place the pan in the refrigerator and let the fudge set for at least 2-3 hours or until firm. Once set, use the parchment paper overhang to lift the fudge out of the pan, place it on a cutting board, and cut it into squares.