Vettel used soft rubber to knock teammate Charles Leclerc off the top spot by a quarter-of-a-second with 20 minutes remaining, setting a time of 1m14.013s.
Leclerc had used the same rubber to relegate Lewis Hamilton to third place, with the Mercedes drivers using medium tyres to set their best times having spent the first part of the session on softs.
Hamilton, who was three tenths off the pace but having lagged behind Valtteri Bottas when on soft rubber, lapped almost three-and-a-half tenths quicker than him on softs.
This also allowed Red Bull driver Max Verstappen to split the pair, just 0.015s slower than Hamilton, to take fourth place.
Bottas ended his session with an off into the gravel at Turn 12 after a lock-up with two minutes remaining, but was able to dig himself out and return to the pits – scattering gravel on the track as he went.
Pierre Gasly struggled early on with vibration issues, but was able to climb to sixth using soft rubber in the final half-hour.
McLaren driver Carlos Sainz, who spent the early stages of the session fastest when on hard rubber, climbed back to seventh just before the half-hour mark when he bolted on softs.
That put him 0.012s ahead of the Haas driver Romain Grosjean, who set his time moments before Sainz.
Grosjean is running the specification of Haas that was used in the season-opening Australian Grand Prix, continuing the back-to-back experiment of the last race at Silverstone with Kevin Magnussen now running the latest, upgraded, version.
Lance Stroll, in the heavily-upgraded Racing Point, was ninth fastest having concentrated on using medium Pirellis, comfortably ahead of the lead Renault of Daniel Ricciardo, who set his time on softs.
Ricciardo had a spin late in the session at Turn 1, but was able to recover.
Sergio Perez was 11th fastest in the second Racing Point, also using mediums, and just ahead of the second McLaren of Lando Norris.
Magnussen was 13th after returning to the track shortly after causing an eight-minute red flag early on when he stopped in the stadium section.
The problem was revealed to be a sensor – he reported over the radio that “I have some sort of alarm and no power” – so after being towed back to the pits he was ready to go again.
Toro Rosso driver Daniil Kvyat set 14th fastest time ahead of teammate Alex Albon, who switched halo during the session having initially run a more basic version before returning the usual spec with aero faring.
Nico Hulkenberg was 16th in the second Renault ahead of Alfa Romeo duo Kimi Raikkonen and Antonio Giovinazzi.
Robert Kubica was 19th in the upgraded Williams, lapping almost six tenths faster than teammate George Russell.