Vettel trumped Lewis Hamilton's best time in a Mercedes with his fastest lap of one minute 27.407 seconds, and will start alongside his Red Bull teammate Mark Webber on the front row of the grid. (All the action and updates at our Racecenter)
It was the young German's 37th career pole and sets up the world champion Red Bull team as favourites heading into the season-opening race at Melbourne's Albert Park street circuit later Sunday.
Hamilton, who has switched to Mercedes from McLaren, had looked set to nab the pole when he lowered the best lap time by 3.3secs to 1:28.087 but Vettel, under the hammer, produced a sizzling final lap to trump the Briton.
Webber, bidding to join Jack Brabham and Alan Jones as home winners of the Australian GP, finished second quickest with 1:27.827.
Felipe Massa was fourth ahead of his Ferrari teammate Fernando Alonso, while German Nico Rosberg was sixth in his Mercedes.
Rosberg was quickest in Q2 from Vettel, while Massa and McLaren's Jenson Button scraped into the final stages of qualifying with flying last laps to beat the cut.
Button was 11th but switched back to intermediate tyres and got to fourth fastest, while Massa improved from 12th fastest to grab fifth.
The six drivers cut after Q2 were Nico Hulkenberg (Sauber), Adrian Sutil (Force India), Jean-Eric Vergne (Toro Rosso), Daniel Ricciardo (Toro Rosso), Sergio Perez (McLaren) and Valtteri Bottas (Williams).
The McLaren team's gamble on using tyre slicks cost Perez a chance of qualifying higher up the race grid.
Team principal Martin Whitmarsh was seen shaking his head trackside at the team error.