Step 1: Place a rack in the middle of the oven; preheat to 350°. Coat an 8x8" baking pan with nonstick vegetable oil spray and line with parchment paper, leaving overhang on all sides. Whisk together ½ cup (1½ sticks) unsalted butter, room temperature, ½ cup (55 g) powdered sugar, 2 Tbsp. granulated sugar, 1 Tbsp. vanilla extract, and 1½ tsp. Diamond Crystal or 1 tsp. Morton kosher salt until smooth and powdered sugar is dissolved. Add 1½ cups (188 g) all-purpose flour and ½ tsp. baking powder and mix with a rubber spatula until a soft dough forms and no pockets of unincorporated flour remain. (Don’t undermix; you want to form some gluten in this shortbread. Mix at least 30 seconds.) Transfer dough to prepared pan and, using an offset spatula lightly coated with nonstick spray, spread into an even layer, working all the way to the edges.

Step 2: Bake shortbread until golden brown on top, 33–40 minutes. Let cool 5 minutes. (Set a timer; you don’t want to go longer. The crust needs to be warm when you add lemon mixture.) Reduce oven temperature to 325°.

Step 3: While the crust is baking, cut 2 medium lemons into about 1" pieces; remove seeds. Transfer to a blender and add 1 cup fresh lemon juice; blend until a pulpy consistency. Strain through a fine-mesh sieve into a large bowl, pressing down on pulp with your hands to extract as much juice as possible. Add 5 large egg yolks, one 14-oz. can sweetened condensed milk, and ½ tsp. Diamond Crystal or ½ tsp. Morton kosher salt and whisk to combine. Set lemon mixture aside.

Step 4: As soon as timer for crust goes off, pour reserved lemon mixture over it. Bake until lemon curd is set but still jiggles slightly when gently shaken, 18–24 minutes. Let lemon bar cool, then cover and transfer to refrigerator. Chill at least 4 hours and up to 12 hours.

Step 5: Using parchment paper overhang, lift lemon bar from pan and transfer to a cutting board. Dust with powdered sugar if desired and cut into 16 squares.