After a run of four successive poles, Hamilton blew his qualifying in the second session at Monza and will start a miserable 12th in his Mercedes.
At the head of the field will be reigning three-times world champion Vettel, and in the ideal scenario as he has Red Bull team-mate Mark Webber alongside him on the front row for company.
Remarkably, Sauber's Nico Hulkenberg produced a stunning lap and will start third.
Equally surprising is the fact Felipe Massa managed to out-qualify Ferrari team-mate and title contender Fernando Alonso, albeit with the Spaniard 46 points adrift of Vettel in the standings.
The best Mercedes could do was Nico Rosberg in sixth, followed by Toro Rosso's Daniel Ricciardo, who will be partnering Vettel at Red Bull next season.
On McLaren's 50th anniversary weekend, there was some cheer as the team managed to get both drivers in the top 10 for only the third time this season.
Sergio Perez will start eighth, Jenson Button ninth, whilst Toro Rosso's Jean-Eric Vergne completes the top 10.
For Hamilton, the second session was a disaster as his initial run saw him go off track at the Parabolica.
Under pressure on his second outing, Hamilton encountered traffic - notably Force India's Adrian Sutil as stewards are investigating a potential impeding offence by the German.
Crossing the line, Hamilton slotted into ninth, but with a gaggle of cars behind him he eventually slumped to 12th behind another shock absentee from Q3 in Lotus' Kimi Raikkonen.
Whilst claiming Sutil did block him, Hamilton was honest enough with his own performance as he said: "I drove like an idiot.
"That's the worst I've driven for a long, long time."
It was Hamilton's worst qualifying performance since the 2010 Malaysian Grand Prix when he could only line up 20th due to the conditions.
Hamilton did start 24th and last in last year's race in Spain, but only after being dumped to the back due to a fuel irregularity after initially claiming pole.
Behind Hamilton on the grid will be Romain Grosjean in his Lotus, followed by Sutil, Williams' Pastor Maldonado and Paul Di Resta in his repaired Force India after he crashed into a tyre wall in final practice.
At the end of the initial 20-minute qualifying period there were no surprises, other than the fact the top 16 - led by Vettel - were all covered by just 0.7 seconds.
The men to miss out on a place in Q2 were Sauber's Esteban Gutierrez and Valtteri Bottas in his Williams, the duo occupying 17th and 18th positions.
Caterham clearly have the upper hand over Marussia these days over one lap as Giedo van der Garde and Charles Pic will line up on row 10 in 19th and 20th.
For the 12th consecutive race Jules Bianchi out-qualified Marussia team-mate Max Chilton, with the Briton last on the grid, finishing four tenths of a second adrift of the Frenchman.
Vettel was quickest in second and third practice and out in front in all three qualifying sessions, and with Webber beside him, Red Bull have undoubtedly conquered their Monza demons for this year.
Although Vettel won in 2011, the track has more often than not far from suited Red Bull in the past.
On this occasion, Vettel said: "It's a bit of a surprise to have both cars at the front at a place where historically we've had bad years.
"We have tried our optimum every year, and some years we've been closer, some far away, but this year we've a strong car.
"It was still a tough session, but we managed to get through and get a good result."
For Webber, second on the grid is his best result at this track.
The Australian said: "I said to the boys (his pit crew) before the session I was looking for a quali PB (personal best).
"It's not been the best track for me, but I'm now looking forward to following up with a good result tomorrow."
As for Hulkenberg, it was only his fourth time in the top 10 this year, but comfortably his best result, and one he was at a loss to explain.
"I don't know where that came from," said Hulkenberg.
"But it's really a nice surprise, especially after a difficult Friday, but the guys have done a great job to turn the car around.
"The car got better and better, and then I did a burning lap (just one run in Q3), but still a surprise it has happened."