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BRING coconut milk, water, lime juice, fish sauce, galangal, lime leaves, lemongrass and sugar to boil in large saucepan. Reduce heat to low; simmer 15 minutes. Remove galangal, lime leaves and lemongrass.
STIR in chili paste until well blended. Add chicken and mushrooms; simmer 10 minutes or until chicken is cooked through.
LADLE into soup bowls. Garnish with cilantro.
Thai Kitchen Tip: If preparing with shrimp or tofu, simmersoup for 25 minutes before adding chile paste. Add shrimp or tofu with mushrooms; simmer 1 to 2 minutes or just until shrimp turn pink or tofu is heated through.