16 oz. mini marshmallows
2 TBSP water
2 lbs powdered sugar
First, sprinkle the water over the marshmallows and microwave them to melt, as if you were making crispy cereal bars. Now you must knead the sugar into the melted marshmallows. Its easiest if you have a heavy duty stand mixer with a dough hook, but it can be done by hand as well. Do not use all the sugar unless you have to. The proper consistency will be about like PlayDoh. If you want to color the entire batch with one color, you can add some paste/gel food color in as you knead. You can also add vanilla or almond extracts or any other flavor you choose during the kneading process. After you have it well kneaded, you will want to wrap it tightly and let it rest for 15-30 minutes.
While working with the marshmallow fondant, have a bit of Crisco or some spray oil handy to keep the work surface, rolling pin, and your hands lightly greased. This will help keep the fondant from sticking and also helps the surface of the fondant maintain a glossy shine. If you find your fondant is still too sticky, knead in a bit more sugar.