Owing to the low tyre degredation being seen on the Monegasque streets, the session was run on the purple ultra-soft rubber, with teams having seven sets of the softest rubber left after Friday.
Valtteri Bottas bounced back from a below par FP2 for Mercedes, with third, but still nearly half a second down on Vettel, with Max Verstappen splitting the two Mercedes drivers in fourth with Lewis Hamilton fifth, after not running on a fresh set of ultra-softs or getting a clean lap.
Daniel Ricciardo was the only other car within one second of Vettel in sixth, although he stopped at the end of the session with brake by wire failure.
Toro Rosso continued their strong weekend, with Carlos Sainz and Danill Kvyat being seventh and eighth quickest, ahead of the Haas of Kevin Magnussen, and McLaren's Stoffel Vandoorne in 10th.
Consistent dominance from Vettel
After the installation laps, the Mercedes and Ferrari's traded fastest lap times, with Bottas starting quickest, but then being shuffled down by Raikkonen's 1:13.568s, before Hamilton returned Mercedes to the summit.
Vettel then came through to post a 1:12.890s, to head a Ferrari 1-2, before Verstappen split the team-mates with a lap just 0.050s slower than Vettel.
Around half-way, the Ferrari pair began to really put the hammer down, with Raikkonen taking P1 by less than a tenth, before Vettel took P1 with the 1:12.395 that would see him top the session.
On their next flying laps, Vettel was just 0.003s slower than his previous effort, while Raikkonen was 0.3 down on what he managed before.
Ocon crashes out
With just over 10 minutes remaining, exiting the Swimming Pool, Esteban Ocon hit the inside barrier and broke the suspension, before burying the Force India in the barrier.
The VSC was deployed as the marshals retrieved the car , with the session going green again with just over five minutes remaining.
Other than Ocon's accident, the session was rather quiet, with the only other big news being Jenson Button getting a 15 place grid penalty for taking a fifth MGU-K and Turbo before the session.
As ever, there were numerous complaints of traffic at Rascasse, with Ocon being told "that's Monaco mate."
|4.||Max Verstappen||Red Bull||+0.545|
|6.||Daniel Ricciardo||Red Bull||+0.997|
|7.||Carlos Sainz Jr||Toro Rosso||+1.005|
|8.||Danill Kvyat||Toro Rosso||+1.168|
|11.||Sergio Perez||Force India||+1.541|
|13.||Esteban Ocon||Force India||+1.677|