In a saucepan over medium-low heat, melt sugar until golden. Carefully pour hot caramel into a round baking dish, tilting to coat the bottom evenly. Let cool.
In a large bowl, whisk together sweetened condensed milk, evaporated milk, eggs, and vanilla extract until smooth. Pour mixture over caramel in the baking dish.
Place the baking dish in a larger pan filled with hot water to create a water bath. Bake in preheated oven for 60 minutes, or until set.
Remove from oven, let cool to room temperature, then refrigerate for at least 4 hours before serving.
To serve, run a knife around the edges of the flan, invert onto a plate, and enjoy!
Notes:
Make sure to let the caramel cool before adding the custard mixture to avoid mixing.