Split the vanilla bean pod lengthwise using a sharp knife. Using the dull edge of the knife, scrape along the length of the inside of the pod to remove the thousands of beans inside. Transfer the beans and pods to a small pot with the sugar and water. Place all ingredients in a small pot and stir to combine.
Place the pot over low heat and bring to a simmer, stirring occasionally. Simmer over low heat until the sugar has completely dissolved, approximately 5 minutes. Remove the pot from the heat and allow the syrup to cool to room temperature. Add the vanilla extract and stir to combine.
Pour the syrup through a fine mesh strainer if you would like it to be clear and free of vanilla beans specks. The syrup can be stored in the refrigerator for up to one month. I like to store mine in a clean, repurposed bottle with a pourer spout in the refrigerator.