Leclerc lapped the tight street circuit with a best lap of one minute 11.265 seconds, 0.053 faster than Mercedes' Valtteri Bottas.
Formula One championship leader Lewis Hamilton, who was fastest in both Friday sessions, was third for Mercedes and 0.213 off the pace.
The Mercedes cars took to the track with their 'halo' devices painted red in a tribute to triple champion Niki Lauda, the Mercedes non-executive chairman who died on Monday.
Vettel locked up and crashed nose first into the barriers at Sainte Devote, with his damaged car swiftly craned off the circuit.
Ferrari said the car had been fixed and the German, a four-times world champion and double winner in Monaco, would be fine for qualifying.
While Leclerc's time delighted the crowd, with plenty of support on a sunny afternoon in the principality, the 21-year-old was summoned to stewards and reprimanded for an infringement of the virtual safety car procedure after Vettel's crash.
Red Bull's Max Verstappen was fourth fastest with team mate Pierre Gasly fifth.
(Reporting by Alan Baldwin, editing by Pritha Sarkar)
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