The two-time defending world champion set the pace with a lap of 1 minute, 23.168 seconds at a Catalunya Circuit that was quickly heating up, causing tires to disintegrate and providing an obstacle for drivers.
Vettel is coming off his first pole position of the season in Bahrain and is looking for a second straight victory at the first European race of the season.
The German driver led Pastor Maldonado of Williams by under two-tenths of a second, with Kamui Kobayashi of Sauber, teammate Mark Webber and Sergio Perez of Sauber all within half a second of F1's points leader.
Drivers were struggling to find the right balance between the hard and soft tires with track temperature reaching 40 degrees Celsius (104 degrees Fahrenheit) and expected to rise further for qualifying. While there were no dramatic spins like at Friday practice, staying on track proved a challenge to several drivers ahead of Sunday's 66-lap race.
Fernando Alonso of Ferrari was sixth with a lap of 1:23.807. Local fans hope the two-time F1 champion can provide a fifth different winner from five races in what has been an unpredictable season so far.
But Vettel's Red Bull team looks poised to seize control with Jenson Button in eighth place and McLaren teammate Lewis Hamilton 16th. Kimi Raikkonen was ninth, while fellow Lotus driver Romain Grosjean completed only two laps before coming off with a fuel-pressure problem.
Nico Rosberg was 10th and Michael Schumacher 17th for Mercedes.
Vettel is four points in front of second-place Hamilton, who is looking for his first victory of the season and first at the Spanish GP. Webber, who has taken pole here the past two years, trails his teammate by five points. Button and Alonso are 10 points behind the leader.
Paul Logothetis can be reached at: www.twitter.com/PaulLogoAP