In a large bowl, whisk together the powdered sugar and meringue powder.
Add the water and vanilla extract (if using).
Beat with an electric mixer on low speed until the ingredients are combined.
Increase speed to medium-high and beat for 5-7 minutes until the icing is thick and glossy.
If the icing is too thick, add water 1 teaspoon at a time until the desired consistency is reached. If it's too thin, add more powdered sugar.
Use immediately for decorating or cover tightly with plastic wrap pressed directly onto the surface of the icing to prevent it from drying out.
Notes
This royal icing can be divided and colored with food coloring for various designs. For flooding, thin the icing slightly with water. For outlining, use it at its thicker consistency.