Combine first 6 ingredients in a 4-quart heavy saucepan. Cook over medium heat, stirring constantly, 10 to 15 minutes or until sugar dissolves and marshmallows melt. Bring to a boil. Cook, without stirring, until a candy thermometer registers 234° (soft ball stage). Remove from heat.
Stir in chocolate morsels until melted. Stir in pecans and vanilla. Spread fudge immediately into 2 aluminum foil-lined, buttered 5 3/4" x 3 1/2" mini loafpans. Cool completely. Remove fudge from pans. Slice fudge into 1/2" slabs.
Note: Lining the loafpans with aluminum foil and buttering them makes it easy to remove uncut fudge from the pans in one piece to slice it.