Vinales, who also recorded fastest times at the Sepang and Phillip Island pre-season tests, jumped to the top of the times ahead of early leader Marc Marquez with around half of the session completed.
The Spaniard later lowered his own benchmark to a session-best of 1m54.455s - that effort eclipsing Andrea Dovizioso's fastest time from Friday's session by nearly four tenths.
Rossi crashed early in the session, but returned to action and ended up 0.277 seconds off his team-mate's pace, with Folger making up the top three as the only other rider to lap the circuit under the 1m55s barrier.
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Folger, who will make his MotoGP debut with Yamaha privateer team Tech 3 this year, continued his impressive showing with third - having run second before being demoted by Rossi.
LCR Honda's Cal Crutchlow was best of the rest in fourth, the Briton missing out on a chance to improve during the final hour after crashing at the end of one of his flying laps.
Aleix Espargaro, another rider to fall, brought his Aprilia into the top five ahead of early pacesetter Marquez - who did not improve on his earlier benchmark time of 1m55.196s on his Honda.
Alvaro Bautista (Aspar) was the fastest Ducati in seventh, beating factory rider Jorge Lorenzo by less than a tenth.
Day one pacesetter Dovizioso, who tried Ducati's new fairing during the day, was 13th-fastest.
KTM had a second low-key session in as many days, with its three riders ending up in the final three spots in the classification.
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