Championship leader Vettel, who heads Hamilton by seven points in the title race, ended Mercedes' streak of 18 consecutive poles with a brilliant final lap following a nail-biting session here at the Sochi Autodrom.
Vettel heads an all-Ferrari front row with Kimi Raikkonen second on the grid and Valtteri Bottas third. Hamilton, mysteriously off-colour for much of the weekend here, was more than half a second behind Vettel, who celebrated his pole in raucous fashion over the team radio.
The last time Vettel started from pole was at the Singapore Grand Prix back in 2015, but his and Ferrari's pace in Russia so far this weekend would appear to point towards a changing of the guard, with Hamilton's Mercedes team having dominated the sport for the past three seasons.
Indeed Mercedes have a great record in these parts having won all of the three grands prix staged here while leading every lap. But they, and in particular Hamilton, have struggled for form, with Ferrari now only cementing their status as real challengers for both the drivers' and constructors' crown.
Hamilton was nearly six tenths of a second behind Vettel, and almost half-a-second down on Bottas. His sluggish pace was greeted by crossed arms from Toto Wolff and Niki Lauda in the Mercedes garage, with the latter puffing out his cheeks and shaking his head.
For Vettel he was jubilant to seal his 47th career pole.
"It is a very good result and I am sure everyone is happy and very proud," he said.
"The car was phenomenal this afternoon and it was a real pleasure to take the car around on low fuel and drive it to the limit."
British driver Jolyon Palmer is in desperate need of a strong weekend after a troubled start to the new season, but he had another day to forget here.
Palmer's Renault mechanics worked through the night to replace his chassis after an exhaust issue was detected in practice on Friday.
He then completed just four laps this morning following an engine failure, before he crashed out of qualifying to complete a torrid 24 hours.
The 26-year-old from Horsham, bidding to haul his car into Q2, ran over the kerbs on the entry to turn four before he lost control of his car and thudded the tyre barrier on the opposing side of the circuit.
Palmer walked away from the incident and is set to start 16th, but his Renault team face yet another repair job following the damage sustained to the front of his car.
And to make matters worse for Palmer his team-mate Nico Hulkenberg, new to Renault this year, qualified an impressive eighth.
Elsewhere, Daniel Ricciardo will line up in fifth for Red Bull, with Williams driver Felipe Massa sixth. Fernando Alonso, yet to make it to the end of a race this season, is only a lowly 15th, while his McLaren team-mate Stoffel Vandoorne is two spots further back on the grid.
Bernie Ecclestone, integral in bringing Formula One to Russia, was back in the paddock for the second race in succession in his so-called role as chairman emeritus.
The 86-year-old, here with his wife Fabiana, watched qualifying with Russian dignitaries. Ecclestone wore a white jacket with the Russian flag on one arm and his name embroided on the other.
Russian President Vladimir Putin will be a guest of honour for tomorrow's race.
Final positions after qualifying:
1. Sebastian Vettel (Ger) Ferrari
2. Kimi Raikkonen (Fin) Ferrari
3. Valtteri Bottas (Fin) Mercedes
4. Lewis Hamilton (Gbr) Mercedes
5. Daniel Ricciardo (Aus) Red Bull - TAG Heuer
6. Felipe Massa (Bra) Williams-Mercedes
7. Max Verstappen (Ned) Red Bull - TAG Heuer
8. Nico Huelkenberg (Ger) Renault
9. Sergio Perez (Mex) Force India - Mercedes
10. Esteban Ocon (Fra) Force India - Mercedes
11. Lance Stroll (Can) Williams-Mercedes
12. Daniil Kvyat (Rus) Toro Rosso - Renault
13. Kevin Magnussen (Den) Haas - Ferrari
14. Carlos Sainz Jr (Spa) Toro Rosso - Renault
15. Fernando Alonso (Spa) McLaren
16. Jolyon Palmer (Gbr) Renault
17. Pascal Wehrlein (Ger) Sauber - Ferrari
18. Marcus Ericsson (Swe) Sauber - Ferrari
19. Romain Grosjean (Fra) Haas - Ferrari
20. Stoffel Vandoorne (Bel) McLaren
Predict the podium
I went for Raikkonen, Hamilton and Vettel as my top three. Pick yours here.
Tomorrow should be interesting
I have to admit I can't wait to see the race down to that second corner.
Who will survive or who will, well, not?
Vettel: "If you look at the first three races, we had a good start to the season. It's a great achievement, we managed to improve the car for this race.
"We're back, if you're talking about the front row. "
Mercedes have no intention of taking it laying down. I think a Sunday afternoon scrap could be quite fun, don't you?
It's just a weekend of scrapping; Old Firm derby, Joshua and Klitschko, North London derby...
Did I miss any?
Hamilton fairly calm despite starting in fourth: "I just wasn't quick enough today. We have to go back to the drawing board and find out why."
When asked about that final sector: "I don't know [why we're losing time], but that's where all the mistakes happened."
An Italian front row and a happy Seb
I don't know about you but I could not call that until the last second and I suspect the race will be equally as thrilling.
We all said we wanted a competitive Formula One, and it is definitely heading that way.
Mercedes need to look at why they were losing so much time in that final sector.
The top ten for Russia
Sebastian Vettel starts on pole ahead of Kimi Raikkonen, Valtteri Bottas, Lewis Hamilton and Daniel Ricciardo.
Making up the top ten are Felipe Massa, Max Verstappen, Nico Hulkenburg, Sergio Perez and Esteban Ocon.
Horses are prancing in Russia
Vettel will start on the front row alongside his teammate Raikkonen who had been leading until that very last sector of their flying laps.
With the Mercedes on the second row with Bottas starting third and Hamilton fourth.
Mercedes in the last sector
Neither Bottas nor Hamilton can take pole and it's a Ferrari front row for the Russian GP. I told you it would be an interesting afternoon.
Seb starts at the top
Vettel takes pole
Mercedes v Ferrari
Raikkonen still on provisional pole.
Just over a minute left
All ten cars are out on the track and here's where they were....
Will they end like this?
Ham in the pits
The three-time World Champion has had a weird weekend so far and just can't seem to manage the car like he normally does.
The Mercedes are there
Bottas goes second and I don't know what is going on with Hamilton but he goes fourth behind Raikkonen, his teammate and Vettel.
Toto Wolff and Niki Lauda did not look completely happy with that lap.
We have just over five minutes to go... I don't think anyone can call it.
Ricciardo, Verstappen, Massa, Perez, Hulkenburg and Ocon make up the final ten as it stands.
We're in the 1:33's
Raikkonen goes fastest with a 1:33.253 and grab provisional pole. Vettel tries to get ahead of his but drops time in the second sector and is 0.173s behind.
where are the Mercedes?
Neither do we Paul...
Not sure who is going to get this! Merc or Ferrari?— Paul Di Resta (@PaulDiResta) April 29, 2017
Hulkenburg has just overtaken Hamilton on their out lap. How bizarre!
And Hamilton tries to return the favour but the Briton is stuck behind him. Although Mercedes have been doing two warm-up laps ahead of their fast laps.
It's down to the final ten
Mercedes have been fastest so far but after Ferrari's impressive practice it is hard to know who will end up on that front row.
The Silver Arrows are already out and in just over 11 minutes we will know who our polesitter is.
Q2 is over.
Both Force India's are in the top ten, with Massa sitting in a respectable fifth. Kvyat very unhappy with his 13th but he will start in 12th with Sainz having a grid penalty.
The day is over for Sainz, Stroll, Kvyat, Magnusson and Alonso. I just heard Fernando moaning over the radio, so normal service is resumed.
Were the Mercedes "sandbagging"?
Judging by current lap times you have to wonder if Mercedes were just chilling a bit during the practice sessions.
In his home race during his birthday week, Kvyat sits in 11th. Just 0.004s behind Stroll in tenth...
Whose day will be over?
As it stands; Alonso, Perez, Magnusson, Sainz and Kvyat will be out after Q2 but with just under three minutes left there is still time to get that lap that will take them into Q3.
Q2 - Seven minutes to go
Here's where they are as we get to the halfway point of Q2
Bottas is back
The Mercedes goes fastest with a time of 1:33.264 which is the sort of time we are expecting for pole. Hamilton is behind him with a difference of 0.496.
Raikkonen takes the lead
The Ferrari is now on the ultra soft tyres and goes fast with a 1:34.053.
Behind him are Hulkenburg, Massa, Kvyat, Sainz and Magnusson.
Finally getting some times on the boards
Massa and Stroll of Williams set the first times with the veteran coming in at 1:35.677.
I know how you feel mate
We are all systems go but the marshals are still cleaning up the Renault of Jolyon Palmer.
Everyone on those ultra's
Here's how they ended Q1.
Ocon the biggest surprise and as you know I am a fan of the teenager.
Alonso not complaining for a change
Fernando is positive news shocker, he tells garage: "Car felt really good. Well balanced, lots of grip. The lap was nearly perfect."
Everyone is a comedian
Q1 is over
The Ferrari's couldn't continue their lead from the front, and end the session behind the Mercedes.
Out in Q1 are; Palmer, Vandoorne, Wehrlein, Ericsson and Grosjean. Alonso makes it through to Q2 in 14th. I guess it's better than nothing.
Ocon has moved up to sixth. That is a brilliant Q1 from the teenager.
We have the double yellow and it's Jolyon Palmer in the wall after spinning off the track, who will owe his mechanics a drink as they look to repair his car for the SECOND time today. Thankfully, he is fine.
Sainz has just taken his Toro Rosso from 15th to eighth and he'll expect to go through to Q2 now.
The top seven of Bottas, Hamilton, Vettel, Raikkonen, Verstappen, Hulkenburg and Ricciardo are all in the pits.
Q1 - Two minutes to go
With the driver's getting in their last couple of laps, here is how they stand. Have the Mercedes got their groove back?
Massa is in sixth and his teammate, Stroll sits in 14th. Once again the Force India's of Perez and Ocon are in the top ten, sitting ninth and tenth, respectively.
Q1 - Five minutes to go...
At the moment; Ericsson, Grosjean, Wehrlein, Vandoorne and Alonso will be leaving us at the end of Q1. It could be another disappointing weekend for McLaren if things carry on.
Hammer Time getting nearer
Hamilton goes second fastest but he's 0.368s behind his teammate who finished fourth here last year.
Mercedes back in contention
Bottas goes fastest, with Vettel, Verstappen, Raikkonen and Hulkenburg making up the top five.
Here's how the times look so far, with Ferrari continuing their impressive practice sessions.
Q1 - 10 minutes to go
Bottas leads from Vettel, Raikkonen, Verstappen and Hulkenburg. Hamilton appears to be struggling to complete a lap and hasn't yet registered a time.
Raikkonen and Vettel are out on the Super Softs, with the rest on Ultras on a weekend when we expect a one-stop strategy.
We are expecting the pole time to be in the region of 1:33s with Nico Rosberg currently holding the lap record of 1:39.094, which he achieved last year.
13 mins of Q1 left
Nearly half the cars are out on the track. As always it is the slower teams coming out early with Sainz currently leading from Magnusson, Kvyat, Stroll and Palmer. Kudos to Palmer's mechanics to get his car sorted for qualy.
And we are off
We have cars out on the track with Carlos Sainz leading the way.
Daniil Kvyat has just been reminded that they have new brakes on the car. It must have been his birthday present.
Are you okay up there?
I guess this is one way to watch qualifying...
Just moments to go
The sun is shining, the drivers' are getting comfortable - or as comfy as you can in an F1 car - and the pit lane is getting ready to open.
The clock is ticking...
Qualifying will start in just over ten minutes so get those snacks, do what you need to, and get comfortable before we find out who will be where on the grid at the Sochi Autodrom.
Mercedes' new boy
Valtteri Bottas' Granddad told him to eat porridge every day in order to become a racer driver. Not a bad idea, that.
There is something about the Finn, he just seems like a really decent guy.
Who do you think will win the Russian GP?
There's still time to vote...
Q1 getting closer
Based on the practice sessions, it is looking like a straight shootout between Ferrari and Mercedes this weekend for pole. With that said, the Williams could be the dark horses this weekend. Massa ended P3 in sixth, with Lance Stroll 11th. While Nico Hulkenberg looked impressive again ending the session just 0.211s behind Massa in the Renault.
I have a feeling we could have an exciting afternoon ahead.
Will we see some Hammer Time this weekend?
The support for Billy Monger
In a world where sport stars are ridiculously wealthy and often unattainable, it has been beautiful to see the support from Formula One and worldwide for Billy.
Wishing him all the best in his recovery.
Predict the podium
There is still time to get your predictions in and pick your top three here.
Kimi in a tweet
I couldn't have described him better myself.
Kimi Raikonnen is brilliant. Finishes fastest in FP2 and still looks like someone has ran over his cat and nailed it to his front door #F1— Paul (@eskimoletdinov) April 28, 2017
Roll on Spain
Both Red Bull and McLaren will have the upgrades they so desperately need in Barcelona.
The Spanish Grand Prix is on May 14 so this may be another mediocre weekend for both teams.
Times in the final practice session
Is your favourite sitting pretty ahead of qualifying?
Red Bull stress, again
Daniel Ricciardo's reason for stalling on the track was a fuel pressure issue. A problem that Max Verstappen has already suffered with. Both driver's are once again aiming for fifth and sixth...
Here's how they stand in the title race
Are Mercedes pulling a fast one?
Everyone, particularly Sebastian Vettel, seems to believe that Mercedes are sandbagging and that they'll be much improved in qualifying. This is a race where the British team have dominated, winning all three races since it was added to the calendar.
In case you missed it, here's a little recap of the final free session this morning.
The Ferrari’s of Kimi Raikkonen and Sebastian Vettel continued to set the pace in the final practice session at the Russian GP as the Mercedes struggled to match their pace.
Championship leader, Vettel, ended the hour-long session ahead of his teammate as he aims to achieve his third win of the season at a track where his best finish was second in 2015.
Valtteri Bottas, Lewis Hamilton and Max Verstappen completed the rest of the top five at the Sochi Autodrom on Saturday morning.
Renault’s British driver Jolyon Palmer will join the McLaren of Stoffel Vandoorne in moving down the starting grid regardless of where they qualify, with both having to change power units, thus resulting in a grid penalty of 15 places.
There were more concerns for Red Bull Racing when Daniel Ricciardo’s car lost power on track before he ended the morning in eight.
It follows Sergey Sirotkin failing to complete Practice 1 after standing in for Nico Hulkenberg in the the Renault, and it raises more questions about their engine which also powers the cars of Red Bull and Toro Rosso.
Lance Stroll will be buoyed to get through a session without any problems and he ended the session in 11th, with his teammate, Felipe Massa, getting his Williams car into an impressive sixth.
Judging by the scenes in the garage; Mercedes principal Toto Wolff and non-executive Chairman Niki Lauda, both looking visibly concerned about the speed of the Ferrari’s.
The English team have won all three post-war races at the track and have led every one of the 159 laps completed, with Hamilton winning two and Nico Rosberg winning the other.
But it looks like Ferrari’s improvements from last week have bedded in well and they are ready to take the challenge to their nearest rivals in Sochi.
Hello and welcome to the Russian GP.
My name is Natasha Henry and I'll be bringing you all the action from qualifying at the Sochi Autodrom in the fourth race of the season.