Line an 8×8 inch square pan with aluminum foil. Lightly spray the foil and set aside.
In a medium saucepan, melt the tootsie rolls, peanut butter and butter over low heat, stirring constantly. Slowly mix in the icing sugar, milk and vanilla.
Pour the mixture evenly onto the prepared pan. Press the M&M’s into the fudge and let cool. Cut into squares.