The 33-year-old, like Vettel a four-times champion, has taken an unprecedented five wins in Shanghai. Saturday's pole was 52nd of Vettel's career and fourth in China.
The 52nd career pole for the German comes on the back of a strong run in Bahrain, where the team had the quickest auto over the weekend and they will be further buoyed by this performance It is their first pole in China since Rubens Barrichello was quickest in 2004 and the first time Mercedes have been beaten to the front of this grid here since 2012.
Red Bull had pulled off a masterstroke in pitting under the safety auto, giving their drivers the advantage of fresh tyres in a newly bunched-up field.
Max Verstappen was fourth for Red Bull - but his team-mate Daniel Ricciardo's power unit ate itself, dramatically blowing out flames and smoke from its back end.
Ricciardo emerged with just two minutes left of Q1 after another Renault engine failure on the Australian's auto during Practice Three.
Nico Hulkenberg was best of the rest for Renault in seventh but was 1.4 seconds off the headline time.
There was no sign of Ricciardo as the pit lane light when green for the start of Q1.
BC-CAR-F1-Chinese GP, 2nd Ld-Writethru, 510 Vettel takes pole in China, and Ferrari looks like it's backAP Photo CHF133, CHF125, CHF124, CHF132, CHF128, CHF122, CHF121, CHF119Eds: Updates with Hamilton quotes.
RBR principal Christian Horner said his team would need a miracle to get the vehicle out in time to qualify, but with three minutes left on the clock Ricciardo left the pit lane to set one flying lap. He managed to avoid the elimination zone just a tenth of a second. Due to the Swede's starting position of P20 and last, it was a hollow penalty.
Ricciardo had been running fifth mid-race when the safety auto was brought out to clear up debris following a clash between the Toro Rosso drivers Pierre Gasly and Brendon Hartley. Valtteri Bottas came third.
Hamilton also seemed to accept the Ferrari dominance.
Williams'Lance Stroll and the Saubers of Charles Leclerc and Marcus Ericsson were the other drivers to be eliminated in the opening phase of qualifying, Leclerc having been lucky to avoid the barriers after a lairy spin out of the final corner. The Dutchman locked up his rear tyres into the hairpin and tagged the Ferrari.
Sergio Perez and Esteban Ocon are also level, with the Frenchman making up for his Melbourne deficit in the desert by making Q3 for a Force India team who have struggled to meet expectations.
Toro Rosso driver Brendon Hartley was slowest in Q2 and ended up P15, just under 0.3s slower than Vandoorne. Raikkonen's last pole was in Monaco in 2017.
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