The Australian clocked a best lap time around the Mediterranean street circuit in one minute and 14.607 seconds to finish more than six-tenths of a second faster than defending three-time champion Lewis Hamilton and nearly nine-tenths clear of championship leader Nico Rosberg.
To endorse Red Bull's revival, Ricciardo's team-mate record-breaking teenager Max Verstappen was fourth-fastest just behind Rosberg.
Russian Daniil Kvyat, the man replaced at Red Bull by the 18-year-old Dutchman, was fifth for Toro Rosso ahead of his team-mate Spaniard Carlos Sainz and seventh-placed Finn Kimi Raikkonen of Ferrari.
Vettel was one of several drivers to make close acquaintance with the barriers around the steel-lined streets of the Mediterranean principality in a session that produced a series of Virtual Safety Car (VSC) interruptions.
These were prompted by unexpected off-track excursions from Brazilian Felipe Nasr of Sauber at the Ste Devote corner, Frenchman Romain Grosjean hitting the barriers at the exit of the chicane in his Haas, followed in a similar accident by Indonesia's Rio Haryanto of Manor.
Dane Kevin Magnussen then followed suit at the final corner when he went into the barriers at the exit of Rascasse just before Vettel 'kissed' the wall at Ste Devote again.
Mercedes steered clear of trouble but were unable to repeat their supremacy of the morning's opening free session when Hamilton topped the times.
As the afternoon session ended, Hamilton suffered a minor setback that revealed the pressures - a jack flipping during work on his car and smashing a hole in the nose section.