Add the flour, nutmeg and salt into a large mixing bowl. Use a whisk to combine. Set aside.
Add the yeast, sugar and 1/4 cup of warm water into a large mixing bowl. Gently stir to combine. Allow to sit in a warm spot for 5 minutes until it becomes foamy.
Add the remaining 3/4 cup of water and vanilla and stir to combine. Add the dry ingredients and stir using a spatula until it reaches a smooth, wet dough consistency. Cover the bowl with plastic wrap and set it aside in a warm spot of the house for 1-1 ½ hours. The mixture should double in size and become soft and bubbly.
Add the oil into a deep fryer, or saucepan making sure there is at least 2 inches between the oil surface and the top of the pot. Heat the oil on medium high heat.
The next part can seem a little tricky, but keep in mind, if this is your first time at attempting to make loukoumades, you get better the more you make each one. Slide dollops of the batter, about the size of a tablespoon, into the hot oil. The best way to do this is to grab a handful of batter in a well-oiled hand and use the spoon to cut off the batter as you squeeze it out your hand. Let the little dollops gently fall into the oil and fry for a couple seconds before you add the next dollop of batter. Turn overusing a slotted spoon to make sure they’re golden on both sides.
Once they’re golden on all sides, take out of the oil and place on a plate lined with paper towels. Allow to sit for 1 minute before transferring to a plate and drizzling with oil and pistachios.
Please note: loukoumades are best served warm or the same day they’re made.