The 31-year-old Briton completed the 5.543km circuit in one minute 32.850 seconds.
His drive eclipsed the pole position lap record for Sepang set by Juan Pablo Montoya in a Williams in 2004.
"I really enjoyed the lap. It could have been faster," said Hamilton, who finished four-tenths of a second faster than his Mercedes teammate Nico Rosberg.
Hamilton’s pace in Malaysia marks a timely return to form for the three-time world champion. Robserg has won the last three races to open up an eight point lead in the drivers’ championship.
Hamilton trailed Rosberg by 43 points after the first four races of the season but then turned on the style to take a 19-point lead.
But Rosberg’s victories in Belgium, Italy and then Singapore two weeks ago has given him the ascendance.
"This is definitely the best the car that has been here," Hamilton said. “A huge thank you to the team, who continue through the whole year to improve. It's great work coming here after the last few weeks with Nico's wins."
Third on the grid will be Red Bull’s Max Verstappen. The Dutchman, who celebrated his 19th birthday on Friday, will begin the race one place in front of his teammate Daniel Ricciardo.