The Mercedes driver bounced back from a troubled final practice session, where he admitted to being lost on set-up, to edge out Vettel for the top spot on the Nurburgring grid on his final flying lap.
But with uncertainties about the long-run form of the set-up direction he chose, and how new Pirelli rears will fare in the race, Hamilton knows he faces a tough challenge if he is to convert his pole position into his first win of the campaign.
Mercedes has made good progress in recent races with its tyre form, though, and Hamilton reckons there is still plenty to play for.
"I think it is going to be very hard," he said about his race chances. "The Red Bulls have made a step this weekend, and I think a lot of teams have made a step forwards.
"[Mark] Webber said to me that the tyres seemed to work on his car, so I think perhaps they have potentially gained a bigger advantage than we have with this switch of tyres.
"His long run was very strong the other day, so I anticipate they will both be strong tomorrow - but of course it would help if we could get into Turn 1 in the lead and hold them behind.
"We still have degradation issues, so it is not something that we have completely cured, but I don't think it is impossible.
"And I have a new set-up, so we don't know how it will work on a long run. I go in there with my fingers crossed and hope it works well."
Mercedes appeared to be behind Red Bull with its long-run pace during Friday afternoon, but team principal Ross Brawn thinks that fluctuating track conditions and temperatures make things much more difficult to predict for the race.
"We obviously don't know what fuel they had; although they certainly looked to be in better shape on Friday afternoon than we were," said Brawn.
"That is why we made some changes to the cars to try and improve that, but we seemed to go backwards.
"The track tomorrow is going to be very different to what we saw on Friday afternoon and I think it is going to be pretty challenging tomorrow with the heat and keeping the tyres together.
"Tomorrow will be tough. Red Bull did look good on Friday afternoon but they have to anticipate the changes they need to make to carry that performance into Sunday – as it will be 10-15 degrees hotter tomorrow than it was on Friday."