The German's late marker usurped 2008 world champion Lewis Hamilton by 0.133 seconds with Force India's Adrian Sutil only marginally behind in third.
Red Bull's Mark Webber was next, ahead of season-opening race winner Kimi Raikkonen's Lotus with the second Force India of Paul Di Resta sixth quickest, just 0.372 seconds behind Vettel.
Seventh-placed Jenson Button enjoyed his best practice session of the nascent season, the Briton nursing his McLaren around the demanding Sepang Circuit in 1:36.822, more than a second quicker than he had managed on a difficult Friday.
With the Ferraris of Felipe Massa and Fernando Alonso, winner in Malaysia a year ago, both easing into the top 10 by the end of the 60-minute session, the battle for pole position in the late afternoon looks set to be a keenly contested affair.
Red Bull are masters of one-lap pace so both Vettel or Webber will fancy their chances of claiming top spot on the grid, but Lotus, Ferrari, Mercedes and even Force India could challenge for front row spots, especially if it rains.
Webber and Raikkonen topped the timesheets in Friday's two practice sessions but Hamilton, on a lighter fuel load and equipped with the faster medium tyres, proved on Saturday he had the pace to match the front runners.