Ferrari were the only team to run the soft tyre, which is about a second a lap faster than the medium used by Mercedes.
Nico Rosberg was third fastest, 0.503 seconds slower than Vettel, with Lewis Hamilton a further 0.157secs adrift.
Max Verstappen was sixth following his promotion to Red Bull, 0.169secs behind new team-mate Daniel Ricciardo.
The Dutchman visibly took a few laps to become accustomed to the higher grip of the Red Bull compared to the Toro Rosso he has been driving so far, entering Turn Six in jerky style, but was into his stride after a handful of laps.
Daniil Kvyat, who has been demoted to Toro Rosso to make way for Verstappen, was 12th fastest, four places and 0.505secs slower than team-mate Carlos Sainz.
Hamilton's Mercedes engine is fitted with a new design of part of the hybrid system in an attempt to cure the problems that have hit him in the last two races.
The new part is the MGU-H, the part of the hybrid system which recovers energy from the turbo and which failed on Hamilton's car in qualifying at both the Chinese and Russian Grands Prix.
Hamilton also has a new turbo for this weekend - and is on the third example of both new parts, with only five allowed to be used all season. The world champion, who is 43 points behind Rosberg in the championship after just four races, admitted on Thursday it was inevitable he would suffer grid penalties later in the season as a result of his high consumption of engine parts.
Rosberg is using a new engine and MGU-K - the hybrid system that recovers energy from the rear axle - but is only on his second example of both.
Behind the Red Bulls, Williams' Valtteri Bottas was seventh fastest and and team-mate Felipe Massa ninth despite two similar spins at Turn Five, ahead of McLaren's Fernando Alonso.
The Spaniard's team-mate Jenson Button was only 19th, with the official F1 website saying he had steering problems.
Ferrari's focus on soft tyres could potentially indicate that they will try to take advantage of their car's gentle treatment of tyres by focusing on that rubber for the race, which might be a way of reducing their performance deficit to Mercedes.
The Circuit de Barcelona-Catalunya is notoriously tough on tyres and this is the first race at which Pirelli has brought the soft tyre to this event.
Mercedes, as they did during winter testing, focused their running on the medium tyre.
There was a bizarre incident at the end of the session when Vettel was sent out as the clock was running down. The German stopped at the end of the pit lane, telling his team the light was going red just as he passed it.
Spanish Grand Prix First practice results
Spanish Grand Prix coverage details
Sebastian Vettel headed Kimi Raikkonen in a Ferrari one-two in first practice at the Spanish Grand Prix.