In a small saucepan, combine sugar and water. Slice the vanilla bean and scrape out the seeds. Add the vanilla seeds and bean to the saucepan. Heat the mixture over medium high heat and cook for 25 minutes stirring occasionally. Remove from heat and let the syrup cool. Transfer to a clean glass bottle. Store in the refrigerator for up to 2 weeks.
If you do not have vanilla beans, you can substitute with 2 tablespoons of pure vanilla extract. Follow the steps of preparation and add the extract to the syrup after cooking for 25 minutes.