In a saucepan, combine confectioners' sugar and cream. Bring to a boil, stirring constantly. Remove from the heat; stir in chocolate until melted and smooth. Stir in vanilla. Cool until mixture is thickened, about 25 minutes, stirring occasionally.
In a bowl, cream butter. Gradually beat in chocolate mixture until blended. Cover and refrigerate until ready to use.
Editor's Note: This recipe makes enough to frost 24 cupcakes or the top of a 13x9-in. cake. Recipe can be easily doubled.