Using an electric mixer, mix the butter and cream cheese, scraping down the sides as needed, until the mixture is light and fluffy. This will take about 3 minutes.
With the mixer on low speed, add the powdered sugar, 1/2 a cup at a time, until it is thoroughly mixed.
Add the vanilla and beat the frosting on medium speed for about 2 minutes.
Store in an airtight container in the refrigerator.
*I use the beater blade for beating together the cream cheese and butter, then switch to the whisk to beat in the powdered sugar. The whisk generally gives you a fluffier frosting.*Want your frosting even fluffier? Beat for an additional 2 minutes.