Hamilton lapped the Yas Marina harbourside circuit with a best time of one minute 42.130 seconds, 0.290 ahead of team-mate Jenson Button.
Vettel completed just seven laps but was still third fastest, 0.484 off Hamilton's pace after failing to set a time until the final four minutes with mechanics working on the front brakes of his car for much of the hour.
Ferrari's Fernando Alonso, Vettel's closest rival who trails the 25-year-old German by 13 points with three races remaining in the Formula One season, was only the eighth fastest on track despite the team bringing front and rear wing upgrades.
Alonso's time was 1.003 seconds slower than Hamilton.
The Spaniard's mechanics again broke the curfew for the second day in a row, an indication of the effort the Italian team are putting in for Alonso in what amounts to a private duel with Vettel.
Teams are allowed to break the curfew, designed to ensure mechanics get a rest and are not putting in regular all-nighters, four times in a season. Ferrari have used up two of their exemptions.
Australian Mark Webber was fourth fastest for Red Bull while Germany's Nico Hulkenberg, who is moving to Sauber next season, was fifth for Force India ahead of Frenchman Romain Grosjean in a Lotus.
Venezuelan Pastor Maldonado, at home on a circuit that has characteristics of Monaco and Valencia, was seventh for Williams.
Hamilton's dominance meant that in the 12 practice sessions held since the race first appeared on the calendar, he has been fastest in six of them.
He and Vettel have been on every front row in Abu Dhabi and they alone have won the race.
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