Pour milk into a bowl. Sprinkle gelatin over top; let sit until gelatin softens, about 5 minutes.

Combine cream and 1/4 cup sugar in a saucepan over medium heat; stir in gelatin mixture. Cook and stir until gelatin completely dissolves, about 3 minutes; add 2 teaspoons vanilla extract. Divide mixture among 6 ramekins; cover and chill at least 4 hours.

Combine strawberries, remaining 1/4 cup sugar, water, and remaining 2 teaspoons vanilla extract in a saucepan over medium heat, crushing strawberries with a potato masher while sauce cooks. Simmer until sugar has dissolved and sauce has thickened, about 10 minutes; cool.

Remove chilled panna cotta from the refrigerator shortly before serving. Dip bottoms of ramekins in warm water to help loosen the custard. Run a thin-bladed knife around the inner edge of each ramekin to loosen; invert onto a dessert plate to unmold. Spoon strawberry sauce over panna cotta.