The Brit edged out home-favourite and championship leader Vettel by just over a 10th of a second with a time of one minute 29.398 seconds.
After the multiple tyre failures at Silverstone and a week dogged by threats of driver boycotts, the session passed without incident.
Pirelli changed the tyres to a Kevlar construction, producing 1000 new tyres in just 72 hours and shipping them to Germany from Istanbul.
Toro Rosso’s Daniel Ricciardo boosted his chances of taking Webber’s seat at Red Bull as he put in a solid lap to take sixth place, behind Romain Grosjean.
Ferrari’s Felipe Massa looked on top-form throughout the day and was the quickest man in both Q1 and Q2 but failed to perform in Q3, only managing seventh position – out-qualifying Alonso who came eighth.
Jenson Button will start in ninth and Nico Hulkenberg 10th.
There was shock for Nico Rosberg as he was knocked out of Q2 and qualified in 11th place after Mercedes took a gamble by pitting him early in an attempt to save a set of tyres.
Force India Drivers, Paul Di Resta and Adrian Sutil were also surprise drop-outs of the session, with Di Resta out-qualifying his German team-mate.
There was disappointment for Williams as both their drivers Pastor Maldonado and Valtteri Bottas found themselves in the drop-zone in Q1 in the team’s 600th race.
1. Lewis Hamilton Britain Mercedes-Mercedes 1m 29.398s
2. Sebastian Vettel Germany Red Bull-Renault 1m 29.501s
3. Mark Webber Australia Red Bull-Renault 1m 29.608s
4. Kimi Raikkonen Finland Lotus-Renault 1m 29.892s
5. Romain Grosjean France Lotus-Renault 1m 29.959s
6. Daniel Ricciardo Australia Toro Rosso-Ferrari 1m 30.528s
7. Felipe Massa Brazil Ferrari-Ferrari 1m 31.126s
8. Fernando Alonso Spain Ferrari-Ferrari 1m 31.209s
9. Jenson Button Britain McLaren-Mercedes no time
10. Nico Hulkenberg Germany Sauber-Ferrari no time
11. Nico Rosberg Germany Mercedes-Mercedes 1m 30.326s
12. Paul di Resta Britain Force India-Mercedes 1m 30.697s
13. Sergio Perez Mexico McLaren-Mercedes 1m 30.933s
14. Esteban Gutierrez Mexico Sauber-Ferrari 1m 31.010s
15. Adrian Sutil Germany Force India-Mercedes 1m 31.010s
16. Jean-Eric Vergne France Toro Rosso-Ferrari 1m 31.104s
17. Valtteri Bottas Finland Williams-Renault 1m 31.693s
18. Pastor Maldonado Venezuela Williams-Renault 1m 31.707s
19. Charles Pic France Caterham-Renault 1m 32.937s
20. Jules Bianchi France Marussia-Cosworth 1m 33.063s
21. Giedo van der Garde Holland Caterham-Renault 1m 33.734s
22. Max Chilton Britain Marussia-Cosworth 1m 34.098s