Red Bull seemed unstoppable on the twisty street circuit having topped all the practice sessions until Vettel produced a special lap of 1:39.491 in his second run in Q3 to secure his 49th career pole position.
Nineteen-year-old Max Verstappen, who was within touching distance of becoming the youngest polesitter in Formula 1, ended up with the best time of 1:39.814. Daniel Ricciardo, who topped the Friday practice sessions, was the third fastest with 1:39.840.
Vettel pushed his Ferrari to the limit in his last run, so much so that he ended up touching the wall.
The pole position leaves Vettel in a strong position to regain the championship lead tomorrow with overtaking difficult on this track. His main championship rival Lewis Hamilton, who has a slender three point lead, was a distant fifth fastest with 1:40.126 today.
Vetttel was expectedly ecstatic after snatching the pole from Red Bull.
"I struggled this morning and afternoon. Don't know where it (lap) came from. The car was tricky but it became better and better and the car came alive. I knew we had it in us but there was initial struggle. However, it will be a long and tough race tomorrow. Anything can happen," said Vettel.
For the record, seven of the last eight races here have been won by the polesitter.
Despite missing out on the top spot, Ricciardo and Verstappen sounded confident going into the race.
"It is a shame that we could not take pole but still confident of victory. Sebastian turned it on today but we will get them on race pace," said Ricciardo.
Kimi Raikkonen put the other Ferrari in fourth spot with more than half a second separating him and Vettel.
Hamilton will have his teammate's company on the third row after Valtteri Bottas qualified sixth, almost seven tenths slower than the Briton.
Nico Hulkenberg was seventh fastest in the Renault while it was surprising to see both McLarens of Fernando Alonso and Stoffel Vandoorne make the top-10, eighth and ninth fastest respectively. Carlos Sainz was 10th in the Toro Rosso.
Force India were eliminated in Q2 with Sergio Perez finishing 12th fastest after complaining about his tyres.
Renault's Jolyon Palmer will start ahead of the Mexican after missing out on Q3 by the smallest of margins. The others knocked out in Q3 were Daniil Kvyat, Esteban Ocon and Romain Grosjean.
Verstappen, having topped practice three, was the fastest in the first two sessions of qualifying.
In Q1, Vettel and Raikkonen were the first ones to set a timed lap. An oil spill that occurred in the support event made conditions slippery through Turn 20 and 21.
The struggle of Williams so far this weekend continued with both Felipe Massa and Lance Stroll eliminated in the first session. Massa hit the wall to have his right rear tyre punctured at Turn 21.
Moments later, Ocon too hit the same wall.
Expectedly, all drivers started their first run on the ultra soft tyres.
The drivers eliminated in first session were Kevin Magnussen, Massa, Stroll, Pascal Wehrlein and Marcus Ericsson.