Vettel ended a seven-race winless streak at Interlagos a fortnight ago, and he would appear in contention to end the season with successive victories after soaring to the top of the time sheets.
The Ferrari driver posted a best lap of one minute and 39.006 seconds to finish clear of Hamilton with Red Bull's Max Verstappen in third.
Hamilton and Verstappen were one tenth-of-a-second adrift of Vettel at the Yas Marina circuit, with Ferrari's Kimi Raikkonen 0.512 sec behind in fourth and Mercedes' Valtteri Bottas fifth.
Both Vettel, who needs to finish only eighth to seal the runner-up spot in this year's title race, and Hamilton have won on three occasions in Abu Dhabi, and started from pole position three times, too, and the pair look set to dominate here once more. Verstappen, who has enjoyed a strong second half of a season that has included two wins, is poised to keep them both on their toes.
British driver George Russell, 19, was handed his second practice run-out in as many grands prix by Force India, and he finished 11th - 2.1 sec off Vettel and within one second of Sergio Perez in the sister car.
The Mercedes junior, who won the GP3 championship with a round to spare, is set to make the step up to Formula Two next season, and is also in the running for the reserve drive with the British-based Force India team.
Perez finished sixth in the order ahead of the McLaren duo of Fernando Alonso and Stoffel Vandoorne, while Daniel Ricciardo was 10th for Red Bull.
Felipe Massa, who will start the 269th and final race of his Formula One career on Sunday ahead of his impending retirement, posted the ninth best time.
Final Times after First Practice:
1 Sebastian Vettel (Ger) Ferrari 1mins 39.006secs
2 Lewis Hamilton (Gbr) Mercedes GP 1:39.126
3 Max Verstappen (Ned) Red Bull 1:39.154
4 Kimi Raikkonen (Fin) Ferrari 1:39.518
5 Valtteri Bottas (Fin) Mercedes GP 1:39.741
6 Sergio Perez (Mex) Force India 1:40.293
7 Fernando Alonso (Spa) McLaren 1:40.522
8 Stoffel Vandoorne (Bel) McLaren 1:40.569
9 Felipe Massa (Bra) Williams 1:40.723
10 Daniel Ricciardo (Aus) Red Bull 1:40.773
11 George Russell (Gbr) Force India 1:41.131
12 Romain Grosjean (Fra) Haas F1 1:41.306
13 Lance Stroll (Can) Williams 1:41.581
14 Pierre Gasly (Fra) Scuderia Toro Rosso 1:41.646
15 Carlos Sainz (Spa) Renault 1:41.748
16 Pascal Wehrlein (Ger) Sauber-Ferrari 1:41.752
17 Nico Hulkenberg (Ger) Renault 1:41.864
18 Antonio Giovinazzi (Ita) Haas F1 1:42.065
19 Marcus Ericsson (Swe) Sauber-Ferrari 1:42.344
20 Brendon Hartley (Nzl) Scuderia Toro Rosso 1:42.585
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