Add the sugar and water to the instant pot and mix well.
Secure the lid, close the pressure valve, and cook for 11 minutes at high pressure.
Quick-release pressure.
Add the room temperature butter, peanut butter, white chocolate chips, and vanilla extract to the pot and quickly stir until well combined.
Pour the mixture into a parchment-lined 8x8 dish and smooth out the top with a spatula.
Let the fudge cool down on the countertop for 30 minutes.
Put it in the fridge for a minimum of 4 hours to set (or leave it overnight).
Lift from the pan using parchment, then cut into squares.