In a large mixing bowl, add the softened cream cheese. Use an electric mixer to beat until smooth and creamy, ensuring no lumps remain.

Add the powdered sugar and peppermint extract to the cream cheese mixture. Stir well to evenly distribute the flavor.

Gently fold the Cool Whip into the mixture using a spatula. Continue folding until the ingredients are fully combined and the dip has a light, fluffy texture.

Transfer the dip to a serving dish and refrigerate for at least 2 hours to allow the flavors to meld.

Garnish with crushed candy canes or a sprinkle of powdered sugar if desired. Serve with vanilla wafers, animal crackers, graham crackers, fresh fruit, pretzels, or your favorite dippables.