In a small heavy saucepan, combine sugar and water. Bring to a boil; cook over medium-high heat until a thermometer reads 240° (soft-ball stage), 3 to 4 minutes. Meanwhile, using a stand mixer, beat egg yolks in a large bowl on high speed until thick and foamy, 8-10 minutes.
Slowly pour hot sugar syrup over egg yolks while beating continuously. Continue beating on high until mixture cools to room temperature, 15 to 20 minutes.
Gradually add butter, a few tablespoons at a time, beating on medium after each addition until smooth. Beat in vanilla. Use immediately.