It capped a dominant weekend for Hamilton in front of his home fans and the three-time world champion was assisted by Mercedes teammate Valtteri Bottas making up seven places to join him on the podium after finishing second.
Worryingly for Ferrari, Vettel's tyre trouble came immediately after team-mate Kimi Raikkonen experienced the same blow-out.
Ricciardo is currently fourth in the championship, 60 points adrift of Vettel, whose lead over Hamilton has now been cut to one point.
"I think the one he put in before we were able to beat but yeah, obviously the gap at the end was bigger, around half a second, a bit bigger, so I think he owned the pole position today", Vettel said.
Raikkonen was third for Ferrari, after the Italian team had made a strategic gamble with their tyres, ahead of Max Verstappen and his Red Bull team-mate Daniel Ricciardo, who had started 19th on the grid.
Unfortunately for them, they'll have to attempt to do so at Lewis Hamilton's home race when drivers take part in the British Grand Prix.
Both drivers were on a one-stop strategy for the 51-lap race around the 5.891-kilometer (3.660-mile), 18-turn track, but the timing of their stops differed drastically.
Ferrari driver Kimi Raikkonen was on course for second place finish. "I think I got away without blocking him, but I will take a look", Hamilton told reporters later in the post-qualifying press conference.
"Thank you to everyone who turned up, I see you, God bless you", said Hamilton over the radio on the cool down lap before stepping out of his auto to chants of "Lewis!" "I am so proud I could do this for you all".
Red Bull Racing had an interesting race, getting the fourth and fifth places.
"I was pretty sure the tires would be fine".
Force India duo Sergio Perez and Esteban Ocon were then seventh and eighth, split by 0.172secs, with McLaren Honda's Stoffel Vandoorne ninth and Grosjean tenth for Haas. Daniil Kvyat was 12th fastest ahead of Fernando Alonso, who qualified 13th but will drop to last on the grid once his 30-place engine penalty has been applied.
"That functions really well and if it was down to me alone I would like to continue with this for many more years".
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