The in-form German was fastest in the morning session by three-tenths of a second and dominated the opening day, repeating the feat by four-tenths in the afternoon with a flawless demonstration of smooth precision on the technical Hockenheim track.
Just five days after losing the lead in this year's championship for the first time, it was a perfect bounce-back by the 31-year-old Mercedes man.
Rosberg clocked a best lap of one minute and 15.614 seconds in the second session to outpace Hamilton by 0.394 seconds ahead of four-time champion Sebastian Vettel of Ferrari.
But Rosberg was not fooled into thinking he will have an easy ride to pole position on Saturday.
"I don't think my team-mate was pushing so we didn't see what he can do and I expect a much tougher fight tomorrow. But it's a good start to the weekend," said Rosberg.
"And it's great to be back in Hockenheim, at this historic track. "The asphalt is old, so the way the tyres work is completely different to Hungary, where it was so new.
"Here it's much more snappy and more of a challenge, but in general our car worked well out there today.
"Saying that, we were very quick on Friday in Hungary, but then on Saturday and Sunday everyone else was very close. So that's a warning not to get over-excited."
Hamilton said: "It's been a very chilled Friday. The weather has been good and the track feels great.
"It's the original surface so it's nice and bumpy and has lots of character."
He said he had struggled for balance in the second practice session.
"It was not as good and we have a few things to look at but I'm sure we can sort them out for tomorrow. "It's been a straightforward day with no real surprises.
Mercedes technical boss Paddy Lowe revealed that the team had to compromise Hamilton's programme because he had two reprimands to his name for exceeding track limits.
"There was a little bit of stress this afternoon with race direction concerning the limits at T1 so we compromised to ensure that he avoided a third one."
Dutch teenager Max Verstappen was fourth ahead of his Red Bull team-mate Australian Daniel Ricciardo and 2007 champion Kimi Raikkonen who was sixth for Ferrari.
Another German Nico Hulkenberg responded to being at home by taking seventh in his Mercedes-powered Force India ahead of 2009 champion Jenson Button of McLaren Honda who departed early in the afternoon due to eye problems.
Button went to the circuit medical centre complaining of eye irritation and from there he was transferred to hospital in Mannheim.
After a check-up during which a "foreign body was found and removed", he was told his eye was fine and he returned to the track.
"All good for tomorrow," Button said on his Twitter account.
Mexican Sergio Perez was ninth in the second Force India and two-time champion Spaniard Fernado Alonso was 10th for McLaren.
Hamilton leads Rosberg by six points in the championship after completing a hat-trick of wins at last Sunday's Hungarian Grand Prix.