Hamilton is the favourite for the F1 World Drivers' Championship in 2017 having missed out on victory in 2016 by just five points.
Nico Rosberg beat him and promptly retired but was replaced by Finn Valtteri Bottas, who managed to finish second in Q3.
But he could not catch his new team-mate who has dominated the weekend at Melbourne and produced a 1:22.188 to ensure he will have the best possible chance of winning the first Grand Prix of the season for the fourth year in a row.
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Hamilton claimed pole last year but was unable to convert it into victory, finishing second to Rosberg as the German won the four opening races of the season.
The Brit will be chasing his third F1 win in Australia tomorrow having won in 2008 and 2015 after equalling his hero Ayrton Senna with his sixth Australian Grand Prix pole.
"It has been a fantastic weekend so far," Hamilton said.
Lewis Hamilton beat Valtteri Bottas and Sebastian Vettel to pole position in Australia
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Sebastian Vettel did not expect to be on the front row but beat Valtteri Bottas
The temporary Albert Park circuit provided some tricky conditions for drivers during qualifying
"It feels like only yesterday I came here and had my first race here in 2007.
"Such an incredible journey.
"I am really proud of my team, the guys have worked so hard to make the car what it is today.
— Lewis Hamilton (@LewisHamilton) March 25, 2017
"Valtteri has done a great job and it is great for Mercedes.
"It is close between us all and it will be a tight race."
"We have a good car, we are working well as a team and things are improving," Vettel said.
"We had a mixed day yesterday but the confidence in the car was there from testing and we showed that today.
"I would have loved it but I don't think pole was up for grabs.
"I think we can do something in the race tomorrow."