I got this recipe from my cousin's wife, Rachael. She also has an awesome blog which is http://thebusybeehive-rachael.blogspot.com/ if you want to check that out. This was so much easier than I thought it was going to be.
1 Cup Mini Marshmallows
1 Tbsp. Water
1 3/4 Cup Powdered Sugar
Place Marshmallows in a standard 1 cup measuring cup and pack in as many as you can. Place in microwave safe bowl and add water. Put in microwave for 45 seconds. Stir with a spoon until it is combined well. It should have a soupy consistency. If you want just one color of fondant, now would be the time to add your food coloring. If you want multiple colors, wait till later. Now add powdered sugar, mix and fold in well until it is no longer sticky. Take out of bowl and knead it in your hands. You can use a little bit of shortening to keep it from sticking. Knead for 3-5 minutes. Roll out until it is almost paper thin. If you want multiple colors, divide into separate balls and add color to those. Use plastic gloves and knead the colors in.