Mix water, sugar, and instant coffee in a large saucepan. Stir over medium heat until sugar is dissolved. Allow mixture to cool to room temperature.
Add vodka (or alcohol of your choice) to saucepan and stir to combine. Pour mixture into two 12 ounce bottles (see note). Cut vanilla bean in half, placing one piece in each bottle.
Allow bottles to set for 2-3 weeks. Strain kahlua to remove vanilla beans and rebottle.Enjoy!
Notes
Note on bottles: This recipe makes approximately 24 ounces of kahlua. I use 12 oz glass bottles like these here.