Line a 9x9 inch baking dish with parchment paper.

In a large saucepan over medium heat, combine sugar, butter, and evaporated milk. Stir well.

Bring the mixture to a boil, stirring continuously until it reaches 234 degrees F on a candy thermometer, about 5 minutes.

If you don't have a thermometer, do the cold water test. The mixture should form a soft ball that flattens under pressure.

Remove from heat and stir in the chocolate chips until melted.

Mix in the marshmallow fluff, walnuts if using, and vanilla extract.

Gently fold in the chopped maraschino cherries.

Pour the mixture into the prepared pan and spread evenly.

Let the fudge set at room temperature for 4 hours or chill in the fridge for a firmer texture.

Once set, cut into squares and serve.