Rosberg was still quickest in practice but only 0.2 seconds separated the top six at the Sepang circuit on Friday where track temperatures peaked at over 50 Celsius causing havoc to the tyres and leading to a number of uncharacteristic spins.
Hamilton, who was quickest in the opening session, spun in both 90 minute runs and compared the circuit to "driving on marbles", while the normally unflappable Fernando Alonso also had trouble controlling his Ferrari.
Rosberg said the team had been taken by surprise at how much the tyres had suffered on the demanding circuit, where heavy breaking areas and long straights played their part in his best time of one minute, 39.909 seconds.
"It was a decent day, tough conditions out there really, very, very hot and tough for the car, tough for the tyres even, we never expected so much tyre degradation," the Australian Grand Prix winner told reporters.
"Its just massive degradation out there which is a big challenge."
Rosberg had sauntered to a 25 second win in the opening race in Melbourne two weeks ago and although he was again quickest in Malaysia practice, the difference was a mere 0.035 seconds over Ferrari's Kimi Raikkonen.
Asked if the amount of wear on the tyres could lead to a different race in Sepang on Sunday, the German said the field had been helped by the degradation issues but he still expected a close fight with his team mate for a key pole.
"For sure there will be lots of different strategies and with the tyre anything can happen," he said.
"It will always be close, just need to try and stay ahead.
"Being on pole as important as it was, just getting that clean start away from the front is always a big advantage at the beginning of the race."
By contrast, Melbourne pole-sitter Hamilton said the tyre troubles had not come as a surprise to him.
In a guarded discussion with reporters, the 2008 world champion said he was more focussed on getting his car around all 56 laps of Sunday's race having been forced to quit after only three at Albert Park.
"Its the same every time I come here, its to be expected. Its took hot for the tyres, they are not working very well in these conditions," he told reporters.
"Even though we have got the hard tyre, the tyres do not feel great but that's the same for everyone."
Hamilton was fourth quickest overall on Friday with world champion Sebastian Vettel ahead of him after completing 30 laps, despite concerns about a faulty fuel sensor and requiring a new electronic power supply for the weekend.
Alonso was fifth and his former team mate Felipe Massa was sixth for Williams.
"I never do (look at Friday's times), it's good that everyone is close, what matters is what happens tomorrow," Hamilton said, grateful that his repaired engine from Melbourne made it through unscathed.
"It saves us perhaps the grid penalty further along the way, so it's good, I'm glad that I had that less mileage on the engine so I hopefully I can push it a bit more."
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