Vettel moved 25 points clear of Hamilton in the title race after he recorded his third win of the season while the British driver finished only seventh in Monte Carlo.
Vettel’s team-mate Kimi Raikkonen, who started from pole position for the first time in nine years, appeared on course to win by holding off Vettel in the opening phase of a processional race.
But Raikkonen lost the lead after he pitted five laps earlier than his Ferrari team-mate.
With track position imperative and overtaking virtually impossible at this most narrow and twisty of circuits, Ferrari’s decision to call Raikkonen in before Vettel raised more than a few eyebrows.
Indeed much of the paddock had been in agreement before the race that the Italian team would ensure that Vettel, rather than Raikkonen, who is a distant fourth in the championship, would be the one to receive the winner’s trophy from Prince Albert of Monaco.
And so it proved. Raikkonen, who last won a race back in 2013, cut a dejected figure during the podium celebrations.
“It is clear to me that Ferrari have chosen their number one driver,” Hamilton, pictured right, said after the race.
“They are pushing everything to make sure Sebastian will maximise on all of his weekends. On strategy, that just does not happen in Monaco.
“It is very hard for the leading car on track to get jumped by the second car unless the team decide to favour the other car. So what they have done is very clear.”
Vettel, who claimed Ferrari’s first victory on the Cote d’Azur in 16 years, now holds the cushion of being the equivalent of a race win clear of Hamilton in this year’s see-saw title battle.
Hamilton put a brave face on what has been a weekend to forget. He was only 13th on the grid after a disastrous qualifying session, and although he will take comfort from progressing to seventh – by virtue of being the last driver to stop for tyres – it marked his second sluggish grand prix in his last three outings.
“Of course I can’t afford another weekend like this,” said Hamilton. “But just because you can’t afford something it does not mean it is not going to happen. There is no point dwelling on the fact that you cannot afford it.
“You just work towards trying to rectify whatever issues you have and hope that you don’t come across it again.
“It is not like we came here unprepared. We will regroup. The Ferrari car seems to work everywhere – they have had arguably the strongest car all year – and the next 14 races are going to be very, very difficult.
“But the more races we do, the more we learn and the stronger we get. I was devastated yesterday but to come away with some points is better than nothing.
“I would like to think that at the end of the season those points are going to be valuable.”
Jenson Button, making a one-off appearance in Monaco following Fernando Alonso’s participation at the Indianapolis 500, provided the biggest incident of the race after he flipped Pascal Wehrlein at Portier following an over-exuberant overtaking manoeuvre.
Despite Wehrlein’s Sauber car resting precariously on the barriers, the German escaped without injury. Button failed to finish following damage sustained in the extraordinary incident and was later hit with a three-place grid penalty.
Daniel Ricciardo finished on the podium ahead of Valtteri Bottas and Max Verstappen, while the British driver Jolyon Palmer crossed the line just outside of the points in 11th.