Combine sugar and water in a large saucepan and cook over medium-low heat, stirring often, until sugar dissolves.

Increase heat to medium-high and boil gently, without stirring, until syrup turns a deep amber color, occasionally brushing down sides of pan with a wet pastry brush and swirling pan (about 8 minutes). (Swirling the pan, instead of stirring, promotes more even cooking.)

Slowly add whipping cream (sauce will bubble vigorously).

Add butter; stir gently until smooth. Remove from heat and stir in vanilla.