Dissolve gelatin in cold water; set aside. Combine buttermilk and sugar in a large saucepan. Cook over low heat, stirring constantly, until sugar dissolves and buttermilk is thoroughly heated. Remove from heat; stir in dissolved gelatin and vanilla.
Pour buttermilk mixture into freezer can of a 2-quart hand turned or electric freezer. Freeze according to manufacturer's instructions. Let ripen at least 1 1/2 hours before serving. Scoop into sherbet dishes, and serve immediately.