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.
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