The four-time champion German clocked a stunning best lap of one minute 17.017 seconds around the tight and challenging Hungaroring circuit as he and Ferrari team-mate Kimi Raikkonen reeled off a convincing one-two.
The Finn was nearly half a second off Vettel’s blistering pace, ahead of compatriot Valtteri Botas in the leading Mercedes, Dutchman Max Verstappen of Red Bull and three-time champion Lewis Hamilton in the second Mercedes.
Briton Hamilton, who is one point behind Vettel in the title race and seeking a record-increasing sixth Hungarian win, was unable to find much overnight improvement in his speed and struggled to match Vettel’s pace, winding up more than a second adrift on a circuit where qualifying is so important.
Australian Daniel Ricciardo’s hopes of repeating his dominance from Friday practice, when he topped both times, were wrecked when he pulled up with a hydraulics problem and parked his car at the side of the circuit.
Belgian Stoffel Vandoorne proved that McLaren Honda can be competitive on circuits where less power is required to be decisive by taking sixth place ahead of German Nico Hulkenberg of Renault, Ricciardo, two-time champion Spaniard Fernando Alonso, celebrating his 36th birthday, in the second McLaren and Briton Jolyon Palmer in the second Renault.
Brazilian Felipe Massa who went to hospital on Friday evening after complaining of feeling dizzy and generally unwell took part in third practice but was down in 17th and said he still felt poorly.
He had spun twice during second practice on Friday and the team reacted on Saturday by calling reserve driver Briton Paul di Resta in to stand by for qualifying later on Saturday.