Picture: Toru Hanai / Reuters. Picture: Toru Hanai / Reuters.
The German set a benchmark time of one minute, 29.166 seconds around 15 minutes from the end of the 90-minute session to edge out championship leader Hamilton by 0.211 seconds.
The Briton had occupied top spot on the timesheets in his Mercedes but Vettel was just 0.042 seconds using the slower soft tyres and went quicker once he switched to the stickier super-softs on an overcast morning with a constant threat of rain.
The German's pace, unleashed just as the rain intensified into a heavy drizzle, appears to have laid down an early marker of Ferrari's potential ahead of Sunday's race.
The four-time champion is due some luck after successive setbacks in the last two races have left him 34 points behind Hamilton in the overall standings with just five of the season's 20 races remaining.
Hamilton and team-mate Valtteri Bottas, who was fifth fastest, were both running an upgraded aerodynamic package but it was not immediately clear whether the reigning champions had rediscovered their lost speed in Suzuka's cooler conditions.
Mercedes had struggled for pace in the sweltering heat of Singapore and Malaysia, where the team was third fastest, but Hamilton made the most of his good fortune to claim a victory and a second to extend his championship lead.
Daniel Ricciardo continued Red Bull's resurgence with the third fastest time, albeit 0.375 seconds off Vettel's pace, while Ferrari's Kimi Raikkonen was fourth.
Max Verstappen, who won in Malaysia on Sunday, was sixth in the Red Bull with Force India's Esteban Ocon seventh.
Nico Hulkenberg was eighth for Renault, ahead of Haas driver Romain Grosjean and Stoffel Vandoorne set the 10th fastest time in his McLaren at power unit supplier Honda's home race.
The session did not pass without incident, however, as Carlos Sainz brought out the red flags after 51 minutes when the Spaniard crashed after losing control of his Toro Rosso at the exit of the turn 11 hairpin.
The Renault-bound Spaniard, already set for a hefty grid penalty for exceeding his power unit component allocation, walked away unscathed but his car came to a rest across the track, leading to a 16-minute delay as the debris was cleared.
1. Sebastian Vettel (Germany) Ferrari 1:29.166
2. Lewis Hamilton (Britain) Mercedes 1:29.377
3. Daniel Ricciardo (Australia) Red Bull - TAG Heuer 1:29.541
4. Kimi Raikkonen (Finland) Ferrari 1:29.638
5. Valtteri Bottas (Finland) Mercedes 1:30.151
6. Max Verstappen (Netherlands) Red Bull - TAG Heuer 1:30.762
7. Esteban Ocon (France) Force India - Mercedes 1:30.899
8. Nico Huelkenberg (Germany) Renault 1:30.974
9. Romain Grosjean (France) Haas - Ferrari 1:31.032
10. Stoffel Vandoorne (Belgium) McLaren 1:31.202
11. Kevin Magnussen (Denmark) Haas - Ferrari 1:31.216
12. Fernando Alonso (Spain) McLaren 1:31.235
13. Sergio Perez (Mexico) Force India - Mercedes 1:31.530
14. Lance Stroll (Canada) Williams-Mercedes 1:31.602
15. Jolyon Palmer (Britain) Renault 1:31.757
16. Felipe Massa (Brazil) Williams-Mercedes 1:31.912
17. Carlos Sainz Jr (Spain) Toro Rosso - Renault 1:32.252
18. Pierre Gasly (France) Toro Rosso - Renault 1:32.501
19. Pascal Wehrlein (Germany) Sauber - Ferrari 1:32.897
20. Marcus Ericsson (Sweden) Sauber - Ferrari 1:33.397