Lightly grease an 8×8-inch baking pan with butter or nonstick spray. Line with parchment paper, leaving an overhang on two sides to lift the fudge out later. Smooth the parchment so it lies flat in the corners.
nonstick spray or butter, parchment paper
Measure the white chocolate chips, butter chunks, and sweetened condensed milk before heating. Have the marshmallow fluff, vanilla extract, salt, and food coloring nearby so you can work quickly once the mixture is hot.
3 cups white chocolate chips, 14 ounces sweetened condensed milk, 4 tablespoons unsalted butter, 1 cup marshmallow fluff, 1 teaspoon pure vanilla extract, 1/4 teaspoon fine sea salt, green gel food coloring
In a medium, heavy-bottomed saucepan, combine the white chocolate chips, sweetened condensed milk, and butter. Place over low to medium-low heat and stir constantly until completely melted, smooth, and glossy. Do not increase the heat; white chocolate scorches easily.
3 cups white chocolate chips, 14 ounces sweetened condensed milk, 4 tablespoons unsalted butter
Remove the pan from the heat. Immediately add the marshmallow fluff, vanilla extract, and fine sea salt. Stir until fully incorporated and the mixture is thick, smooth, and uniform, similar to soft frosting.
1 cup marshmallow fluff, 1 teaspoon pure vanilla extract, 1/4 teaspoon fine sea salt
Add several drops of green gel food coloring and stir well. Continue adding a drop or two at a time, stirring between additions, until you reach your desired Grinchy shade of green. Keep in mind the color will appear slightly lighter once chilled.
green gel food coloring
Quickly pour the warm green fudge mixture into the prepared pan. Use a spatula to spread it into an even layer and push it into the corners. Tap the pan gently on the counter to remove any air bubbles.
While the surface is still warm and soft, generously sprinkle red heart sprinkles evenly over the top. Press them very gently so they adhere without sinking too deeply.
1/3 cup red heart sprinkles
Let the pan cool at room temperature for 20–30 minutes, then transfer to the refrigerator. Chill for at least 2 hours, or 3–4 hours (or overnight) for firmer, cleaner slices.
Use the parchment overhang to lift the fudge from the pan onto a cutting board. With a sharp knife, cut into about 36 small squares (6 by 6) or your desired size, wiping the knife between cuts for neat edges.
Serve the Grinch fudge on a platter or pack into tins or gift boxes. Pair with hot cocoa, coffee, or milk, and enjoy.