The world championship leader produced a 1:47.764 - the fastest ever motorcycle lap of Mugello - just a few minutes into the session, and then soon improved to 1:47.584s.
But despite his impressive pace, Lorenzo was not completely dominant. Dani Pedrosa eventually got to within 0.095 seconds of the Yamaha's pace on the best Honda, while his team-mate Casey Stoner was 0.289s down on Lorenzo in third.
The other Yamahas completed the top six, with works rider Ben Spies just ahead of Tech 3 duo Andrea Dovizioso and Cal Crutchlow. Spies had a run through the gravel at first corner San Donato, but stayed upright.
Leading Ducati rider was Nicky Hayden in seventh. Italian hero Valentino Rossi was back in 10th on the second factory Desmosedici.
Gresini Honda rider Alvaro Bautista had his third crash in as many sessions with a dramatic fall on the way into the long Correntaio right-hander. Bautista was unhurt, but ended the session slower than the flying CRT Aprilia of Aleix Espargaro.
1. Jorge Lorenzo Yamaha 1m47.584s
2. Daniel Pedrosa Honda 1m47.679s + 0.095s
3. Casey Stoner Honda 1m47.873s + 0.289s
4. Ben Spies Yamaha 1m47.886s + 0.302s
5. Andrea Dovizioso Tech 3 Yamaha 1m48.028s + 0.444s
6. Cal Crutchlow Tech 3 Yamaha 1m48.068s + 0.484s
7. Nicky Hayden Ducati 1m48.189s + 0.605s
8. Hector Barbera Pramac Ducati 1m48.441s + 0.857s
9. Stefan Bradl LCR Honda 1m48.527s + 0.943s
10. Valentino Rossi Ducati 1m48.740s + 1.156s
11. Aleix Espargaro Aspar Aprilia 1m49.234s + 1.650s
12. Alvaro Bautista Gresini Honda 1m49.310s + 1.726s
13. Randy de Puniet Aspar Aprilia 1m49.715s + 2.131s
14. Ivan Silva Avintia Inmotec-Kawasaki 1m50.751s + 3.167s
15. Michele Pirro Gresini FTR-Honda 1m50.962s + 3.378s
16. Danilo Petrucci Ioda-Aprilia 1m51.325s + 3.741s
17. Yonni Hernandez Avintia FTR-Kawasaki 1m51.341s + 3.757s
18. Mattia Pasini Speed Master Aprilia 1m51.587s + 4.003s
19. James Ellison Forward Suter-BMW 1m51.705s + 4.121s
20. Colin Edwards Forward Suter-BMW 1m51.729s + 4.145s