The German, who was quickest in both Friday sessions - having won from pole here last year - ended the hour more than three tenths faster than Lewis Hamilton's McLaren.
Fernando Alonso was third fastest ahead of the continually impressive Nico Hulkenberg. Kimi Raikkonen and Felipe Massa were next up.
Paul di Resta was seventh in the second Force India ahead of Nico Rosberg, Bruno Senna and Michael Schumacher.
Initially it was the McLarens that had the pace in the 60-minute session, while the teams were still using prime tyres with first Hamilton, and then Button setting an early pace in the low 1m50s.
Then halfway through the session, with Red Bull's Mark Webber having given a hint of the RB8's pace by splitting the two McLarens, Vettel went out and was seven tenths up on Hamilton when he was forced to back off for the yellows in sector three.
Those yellows were out for Timo Glock's stricken Marussia, the German having stamped on the brakes and dipped the clutch after his throttle stuck open.
The obstacle cleared, Vettel got straight back on it and became the first man to dip below the 1m50s barrier with a 1m49.614s.
Alonso, having up to this point completed merely an install lap, then went second quickest joining Vettel in the 49s.
Two thirds of the way through and Senna became the first man to try the supersofts, his flying lap putting him momentarily second on the board.
With just over ten minutes to go, teams then began thinking about their qualifying session simulation fliers, and it was just then that Webber replicated Sergio Perez's earlier error and clouted the Armco under the tunnel at the entry left-hander.
Both the Sauber - which spent most of the session in the pits - and the Red Bull needed attention as Webber also picked up a puncture.
With the last of the final yellow flags gone, Vettel emerged from the pits, having previously scattered photographers on the pitlane entry and seemingly suffering some KERS issues.
This time the German pulled out a stunning time of 1m47.947s, and that was that. No one got near it. Hamilton was closest, 0.325s behind the world champion.
But if anyone else had thoughts of a crack at Vettel's time, Vitaly Petrov denied them all by smacking the outside barrier at the penultimate corner in his Caterham, bringing out the red flags.