Lorenzo headed Cal Crutchlow as the Yamahas enjoyed a much more competitive time at Jerez than at Austin two weeks ago.
The session's start was delayed due to ongoing power cut problems at Jerez but once it did get underway Lorenzo emerged on top after an early flurry of times.
The morning pacesetter lay down an impressive early benchmark with a 1m39.691s lap to improve immediately on his FP1 time, while Crutchlow dipped into the 1m39s for the first time and then improved to head the chasing pack.
Lorenzo then went even faster, setting a 1m39.562s, but even his first effort would have been good enough for first place.
The early urgency was shortlived and the next 20 minutes featured little improvement, though Danilo Petrucci suffered yet another mechanical failure as his Ioda-Suter's BMW engine let go in spectacular fashion.
Crutchlow was unable to improve on his early 1m39.733s but had looked set to dethrone Lorenzo in the final minutes of the session after going faster for most of the lap, before losing time in the final sector.
Dani Pedrosa headed Honda's charge with the third fastest time, but he was slower than he managed in the morning session - albeit only by a few thousandths of a second.
Valentino Rossi and Marc Marquez were two improvers in the final quarter of the session, both going under 1m40s for the first time to end up fourth and fifth quickest, ahead of Alvaro Bautista, one of the few to set rapid times in the middle of the afternoon.
Marquez had a steady start to the weekend but set fastest sector times as the session drew to a close - only to replicate Crutchlow's loss of time in the final sector.