The four-time champion's quickest lap of one minute 22.810 seconds around the Spanish Grand Prix circuit was 0.715 quicker than the next best Red Bull driven by Australian Daniel Ricciardo.
The German's time was nearly two seconds faster than last year's Spanish Grand Prix pole time set by Nico Rosberg's Mercedes.
Mercedes, who have done the equivalent in mileage of a return road trip from London to Stuttgart already on the first two days, were again way out ahead of the rest with Germany's Rosberg completing 172 laps.
That equated to 801 km - a record for a single day of testing in the V6 hybrid era that started in 2014 - and added to the 156 laps (726 km) that triple champion Lewis Hamilton managed on Monday.
"That was an F1 Marathon today," said Rosberg, who wrapped up his day's work before the end of the session.
"It's great to see that we are already able to do a lot of mileage -- and we didn't have a single problem either, which is really incredible."
Vettel, whose team have set their sights on denying Hamilton and Mercedes a third title in a row, did 126 laps but brought out red flags at the end of the day when the Ferrari stopped on the track.
McLaren get some important laps in
That tally was bettered by Valtteri Bottas for Mercedes-powered Williams (134 laps) while Spaniard Fernando Alonso managed 119 in his McLaren.
That marked a sea-change for McLaren, fighting back from their worst ever season.
In 2015, Alonso had completed just six laps of Jerez on his first day in the car.
With team-mate Jenson Button getting in 84 laps on Monday, McLaren's tally of 203 from the opening two days meant they had done more laps already than in the first eight days of 2015 testing.
Mexican Sergio Perez was third fastest for Mercedes-powered Force India with Rosberg fourth.
Manor, last year's backmarkers, continued their quietly impressive progress under new management with Germany's Pascal Wehrlein doing 71 laps and ending up eighth fastest of 11. Mexican Esteban Gutierrez was sixth for the new Haas team.