In a small bowl, combine the gelatin powder and 2 tablespoons of cold water and set aside.
Combine the heavy cream, milk, and sugar in a saucepan over medium heat, stirring frequently to avoid a film forming on top.
Once the mixture has reached 150℉, add in the gelatin mixture and stir until fully dissolved.
Remove the mixture from the heat source and stir in the vanilla extract.
Pour the mixture into ramekins or a silicone muffin mold and chill in the refrigerator for 8-24 hours.
If you are turning the panna cotta out of a mold, it is easiest to submerge the bottom of the form in a bath of hot water for 10 seconds before inverting to get a clean release from the mold.