Before the race, 1997 champion Jacques Villeneuve drove the No. 12 Ferrari his late father Gilles used to win the 1978 Canadian GP in the parade lap.
Australian Daniel Ricciardo, victorious in Monaco two weeks ago, was sixth in the second Red Bull as his team-mate Verstappen, who had been fastest throughout practice, continued to deliver a ideal riposte to his critics.
Hamilton had gone into the meeting in Montreal with a 14-point advantage but leaves one point behind Vettel, a vast swing he would not have anticipated from one of his favourite circuits.
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It is the Italian team's first time on pole in Montreal since seven-time champion Michael Schumacher managed it in 2001.
Ferrari team-mate Vettel went on to secure pole position, his fourth of the season.
Vettel wasn't happy about the number of cars on track unaware of the drivers approaching them on a flying lap.
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It means Hamilton is using an engine that has already completed six full races, while the majority of his rivals are are fresh units.
He retired in Azerbaijan after a collision with Ricciardo and in China he tangled with Hamilton and Vettel, finishing fifth after a 10-second penalty demoted him from fourth, while Ricciardo won the race.
Red Bull's Daniel Ricciardo, the 2014 Canadian GP victor, is coming off a victory two weeks ago in Monaco.
"We extracted the best we could out of qualifying". "But it showed in Monaco that we have a great vehicle. It's a great result for all the team, but I think I could have been even faster".
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Red Bull continued to suffer from lack of speed down the straights as they tried to put the pressure on Ferrari, but Vettel finished the session by knocking 12 milliseconds off his own best time. We're trying to compensate for that. "In the race, it all calms down a bit so that's why I think we're always a bit more competitive in the race". It would be much more of a problem if I would be really slow, because that is a critical problem.' When pushed further to explain why he had crashed so much this year, Verstappen replied: 'Like I said I get a bit exhausted of all the questions.