The Repsol Honda rider topped the timesheets by 0.966 seconds from team-mate and World Championship leader Casey Stoner, with Marco Simoncelli (San Carlo Honda) third fastest.
Spaniard Pedrosa, who lies fourth in the overall standings, 83 points behind Stoner, laid down a marker in first practice with a one minute 56.328 second lap which no-one was able to better.
"The feeling was very good today [Friday] from the beginning," Pedrosa said on www.autosport.com. "The bike was working well from the first round and we could move ahead, improving little by little in both practice sessions.
"I think the main difference I felt is that I'm fresh after the summer break. The rest I had has helped me a lot, I can feel the energy I didn't have in the races before the break, so I hope I can keep the pace for Saturday and Sunday and be strong for the race.
"I'm very happy with the job we did in both sessions and I think we can still improve and be ready for both the qualifying practice and the race. I guess the other rivals will also do the same, so we have to keep focused."
The rest of the field tried to respond to Pedrosa's time but Australian Stoner was the only one to break the 1min 57sec barrier.
Simoncelli crashed at the end of the first session, but appeared unaffected as he improved his time in the second session.
Reigning champion Jorge Lorenzo (Yamaha Factory Racing), who trails Stoner by 20 points, was fourth fastest with a third Repsol Honda rider Andrea Dovizioso fifth quickest.
Ben Spies, John Hopkins, Alvaro Bautista, Cal Crutchlow and Colin Edwards completed the top 10, with Valentino Rossi 11th fastest.
Randy de Puniet riding with injuries from a crash at Laguna Seca, had a fall in the closing minutes of practice.