Hamilton struggled for pace all day and, after being hit with a five-place grid penalty for an unscheduled gearbox change, the Brit will begin back on the fifth row on Sunday.
With a stunning lap of 1min.27.958sec. around the 15-turn, 5.412km Bahrain International Circuit, Vettel was just 0.143 seconds faster than teammate Kimi Raikkonen who had been fastest in the seond and third free practice sessions and was looking the quicker of the two drivers until the very end of the final of three segments of the knockout qualifying system.
"We have good pace, the auto is working.in Australia I think we struggled a little bit with the feel of the vehicle".
Ferrari have upset the form book by being the quickest package during the weekend.
Despite his best efforts to chase the German down, it was Ferrari on the top step of the podium for the second successive year.
"Not ideal - far from ideal in the last run with the traffic", said Raikkonen, the 2007 champion.
Ferrari looked dominant throughout qualifying but there were just three tenths separating the top five drivers after their first run in Q3.
It is Ferrari's first pole position in Bahrain since 2007 when Brazilian Felipe Massa turned it into a victory ahead of then-rookie Hamilton, stated the report.More news: Russian GP wants to bring back 'grid girls' for race in September
More news: Schlitterbahn waterslide designer taken into custody
More news: Horizons S&P 500 Covered Call ETF (HSPX) Rises 1.6% for April 5
Mercedes got closer in qualifying than they looked like they might at one point but Vettel was still 0.166 seconds quicker than the fastest Mercedes of Bottas. "I think the vehicle has potential, but we need to make progress and catch up quickly to be there to fight for wins just the way we did at many races past year". "We've got more to do overnight and in the practice tomorrow (Saturday) to five us a vehicle that can fight in qualifying and on Sunday".
"I guess it ultimately proves everyone who said we had a party mode in the last race wrong", he said.
"It was a bit unfortunate", Verstappen said of the crash.
"It was like an on and off switch and suddenly is span the rear tyres up quite aggressively and I spun", he said.
At the head of the pack behind Renault was Pierre Gasly as Toro Rosso continued to enjoy encouraging pace in practice.
Seventh fastest was Kevin Magnussen, with Renault's Nico Hulkenberg setting the eighth-fastest time and Force India's Esteban Ocon setting the ninth fastest time.
As a result of his demotion, Hamilton will line up from ninth place of a grid headed by rival and championship leader Sebastian Vettel. I've got the Soft tyre, so I should be able to go longer - it's going to be interesting to see, there's a couple of different strategies tomorrow. "There are a couple of different strategies tomorrow so I will try and eek out every last bit of power and strength from the vehicle".