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The Briton clocked 1 minute, 38.976 seconds on the 5.5km Yas Marina circuit on Friday, making him 0.427 seconds quicker than the German Vettel.
Vettel's team-mate Mark Webber was third while Hamilton's team-mate Jenson Button came in a disappointing fourth. The Ferrari drivers Fernando Alonso and Felipe Massa fared even worse, as they struggled with handling on the desert circuit and finished fifth and seventh respectively.
Hamilton appears to be the driver to beat this weekend, clocking the fastest times in two of the three practices. His time Saturday was 0.5 seconds faster than Vettel's qualifying time last year when he took pole.
A strong race on Sunday could give Hamilton's season a much-needed boost. Until now, the English driver has been in the headlines mostly for his mistakes, whether it be penalties that sent him down the order or his running feud with Massa that has been fueled by the two colliding in three of the four past races.
Even though he has been crowned champion, Vettel still has several records in his sights. He will be aiming this weekend to equal Nigel Mansell's record for the most pole positions in a season. If he achieves that, Vettel will then set out to win his third race in a row in Abu Dhabi - leaving him needing to take the checkered flag in the final race of the season in Brazil to match Michael Schumacher's record of 13 wins in a season.
Unlike on Friday when Vettel and Alonso slid into the wall it the second session, Saturday's practice was uneventful. Conditions were dry and temperatures were in the high 20s with a light breeze.
