Preheat the oven to 350°F (175°C).
In a saucepan, combine 1 cup of sugar and 2 tablespoons of water over medium heat.
Stir until the sugar dissolves and turns golden brown.
Quickly pour the caramel into the bottom of a mold or individual ramekins.
In another saucepan, heat 2 cups of milk until just boiling.
In a mixing bowl, whisk together the eggs, 1/4 cup sugar, and a pinch of salt.
Gradually add the hot milk to the egg mixture, whisking continuously.
Stir in the vanilla extract.
Pour the custard mixture over the caramel in the mold.
Place the mold in a larger baking dish filled with water (water bath).
Bake for 45 minutes or until set.
Allow to cool, then refrigerate for at least 2 hours before serving.