Ferrari is expected to pose an even stronger challenge to Mercedes this season after Vettel showed signs of a Ferrari revival by winning three races last season.
The four-time world champion was nearly half a second faster than Hamilton in a time of 1min 24.939sec.
However, after dominating the sport for the past two seasons, Mercedes' reliability sent another warning shot to the rest of the paddock as Hamilton ran the most mileage with 66 laps before lunch.
Williams was again the best of the rest as Valtteri Bottas was third fastest.
Mclaren-Honda made a significant improvement on its disastrous performances in testing last season, which set up a hugely disappoining return season to the sport for the Japanese carmaker.
Jenson Button managed 35 laps, but the MP4-31 was still well down on pace nearly three seconds behind Vettel in sixth fastest.
Haas, the first American owned team in Formula One for 30 years, took its first tentative steps as Romain Grosjean logged 13 laps, but his session was ended prematurely by a broken front wing that temporarily stopped running.
Manor Racing was the only team to struggle mightily as new German recruit Pascal Wehrlein managed just seven laps and was over six seconds adrift of the field.
Original source: Vettel quickest in first F1 test