Stir together the sugar and water in a medium saucepan and heat over medium.
After 2 minutes, add in milk. Bring to a simmer.
Add in chocolate chips, and remove from heat. Stir until chocolate chips are completely incorporated.
Add vanilla extract, and stir until smooth.
Serve warm or cold. Keep refrigerated for up to 2 weeks (or freeze for a month or so).
Notes
*Makes 2 cups*This has a thin, drizzling consistency. If you want a thicker sauce, use directly from the refrigerator. You can also try using 2 tablespoons of water instead of ⅓ cup or decrease the amount of milk to ¾ cup.