In a medium saucepan, combine unwrapped caramels, sweetened condensed milk, and butter. Heat over medium-low, stirring constantly for 5-7 minutes until smooth.

Using a toothpick or skewer, dip each marshmallow into the warm caramel mixture, allowing excess to drip off.

In a large bowl, pour in the Rice Krispies. Roll each caramel-coated marshmallow in the cereal until fully covered.

Transfer the coated marshmallows onto a parchment-lined cookie sheet and allow to set for 30 minutes at room temperature.

Store the treats in an airtight container at room temperature or in the refrigerator for a longer shelf life.