Prepare the Dough: In a large bowl, combine the warm milk, instant yeast, and granulated sugar. Add the egg, melted butter, salt, and flour. Mix until a soft dough forms.
Knead the Dough: Knead by hand for 8–10 minutes, or with a stand mixer for about 5–7 minutes, until the dough becomes smooth and elastic.
Let the Dough Rise: Place the dough in a lightly greased bowl and cover it with a clean kitchen towel or plastic wrap. Leave it in a warm place for about 60–90 minutes, or until it doubles in size.
Prepare the Cinnamon Sugar: In a medium bowl, combine the granulated sugar and ground cinnamon. Mix well and set aside.
Shape the Dough Pieces: Gently press down the risen dough and divide it into small, bite-sized pieces, approximately 40–50 pieces.
Coat the Dough: Dip each dough piece into the melted butter, allowing excess butter to drip off. Roll each piece in the cinnamon sugar mixture until evenly coated.
Arrange in the Pan: Lightly grease a 10–12 cup Bundt pan. Arrange the coated dough pieces evenly inside the pan.
Prepare the Caramel Sauce: Melt the remaining caramel-sauce butter with the brown sugar in a small saucepan over low heat, stirring until combined. Remove from the heat and add vanilla extract if desired.
Add the Sauce: Pour the warm brown sugar mixture evenly over the dough pieces in the Bundt pan.
Let It Rise Again: Cover the pan loosely and allow the dough to rise for another 20–30 minutes, until puffy.
Preheat the Oven: Preheat the oven to 175°C (350°F).
Bake the Monkey Bread: Bake for 30–40 minutes, until the top is golden brown and the dough in the center is fully baked. If the top browns too quickly, cover it loosely with foil.
Cool Briefly: Remove the pan from the oven and let it rest for 10–15 minutes. This allows the caramel coating to settle slightly while remaining easy to release.
Invert and Serve: Carefully invert the Bundt pan onto a large serving plate. Lift the pan away and let the warm cinnamon caramel sauce coat the bread.
Enjoy: Serve warm and pull apart the soft, fluffy pieces by hand. Monkey Bread is delicious on its own or with a drizzle of extra caramel sauce.