Line a 9x9 pan with foil. Spray with nonstick spray.
In a medium saucepan over LOW heat, melt the semi-sweet chocolate chips along with half of the sweetened condensed milk.
Pour the chocolate into the prepared pan and place it in the refrigerator to chill while you prepare the next step.
Next, melt the white chocolate chips along with the sweetened condensed milk in a medium saucepan over LOW heat. When the white chips are almost all melted, remove them from the heat and stir in the peppermint extract.
Stir in ¼ cup of the crushed candy canes.
Pour the white chocolate layer over the chilled semi-sweet chocolate.
Sprinkle the remaining ½ cup of candy canes over the top of the white chocolate and gently press down into the top layer of fudge.
Refrigerate until set for 2 to 3 hours or overnight.
Remove from pan by lifting out the foil. Peel away the foil and cut it into bite-size serving pieces.