Preheat the oven to 350°F. Lightly butter the bottom and sides of a 9×13 pan.
In a medium bowl, combine crushed pretzels, ¾ cup sugar, and the melted butter. Press into the bottom of the 9×13 pan. (You can crush pretzels by putting them in a Ziploc bag and using a rolling pin, wooden spoon, or your hands to crush them.)
Bake the pretzel base for 10 minutes. Remove from the oven and allow to cool completely.
In a large mixing bowl, beat the cream cheese, the remaining ¾ cup of sugar, and the vanilla until well combined. Fold in the Cool Whip until the mixture is evenly combined.
Spread the cream cheese mixture on top of the cooled pretzel crust. When adding the cream cheese mixture to the pan, make sure that it goes all the way to the edges. This creates a barrier to prevent the jello from seeping down into the pretzel base and making it soggy.
In a medium bowl, dissolve the jello in two cups of boiling water. Once it is completely dissolved, add two cups of ice water and stir. Stir in the diced peaches. Refrigerate for 15 minutes or until the jello is just starting to thicken but has not yet set.
Carefully pour the peaches and jello over the cream cheese layer. Cover and refrigerate for two hours or until the jello is set. Slice into squares to serve.