Line an 8-inch square brownie pan with foil or parchment paper, letting the paper hang over the sides by 1 inch.
In a glass measuring cup or glass bowl, combine the chocolate chips and condensed milk. Heat in microwave for 1 minute and stir, continue to melt chocolate in intervals of 30 seconds, making sure not to burn chocolate until mixture is smooth.
Gently stir the vanilla extract, 2½ cups of the marshmallows, and 1½ cups of walnuts into the chocolate mixture. Scrape the chocolate mixture into the prepared baking pan. Spread out evenly and smooth the top.
Garnish with remaining marshmallows and walnuts and gently press them into the surface. Cover the pan with plastic wrap and refrigerate until firm, at least 30 minutes. Refrigerate until firm.
Lift the paper to remove the fudge from the pan and peel away from the chocolate. Cut the fudge into squares or wedges.
