Line the baking dish with parchment paper, allowing some overhang for easy removal later.
In a medium saucepan over low heat, combine the white chocolate chips, sweetened condensed milk, and unsalted butter. Stir continuously until the mixture is smooth and fully melted.
Once melted, remove the saucepan from heat and add the key lime juice, key lime zest, and salt. Stir until well combined.
Pour the fudge mixture into the prepared baking dish, spreading it evenly with a spatula.
If desired, sprinkle toasted coconut flakes on top for added texture.
Allow the fudge to cool at room temperature for about 10 minutes, then refrigerate for at least 2 hours to set.
Once fully set, lift the fudge out of the baking dish using the parchment paper overhang. Cut into 16 squares.
Serve and enjoy your delicious Key Lime Fudge!