With his teammate sidelined by a fire, Rosberg took pole for the Hungarian GP by whopping 0.486s with a lap of 1m22.715s in his superior Mercedes.
Sebastian Vettel again beat his Red Bull teammate again and will start on the outside of row 1, but nearly 1/2-second slower than the Mercedes.
Vettel momentarily held pole position in the final minute of Q3, but Rosberg's engineers sent a command to his Mercedes engine from their control center that bumped up the HP and magically Rosberg went 1/2-second faster on his final lap and it was done.
On Sunday it will be no contest as Rosberg motors off into the distance.
It would have been a Mercedes 1-2 start, but Lewis Hamilton was out in Q1 when his Mercedes caught fire.
Valtteri Bottas will start 3rd for Williams ahead of Daniel Ricciardo in the 2nd Red Bull with Fernando Alonso rounding out the top-5 for Ferrari.
It was the 10th pole position of Nico Rosberg's career and he joins Jochen Rindt in 32nd on the all-time list.
Lewis Hamilton’s bid for a fifth pole position in Hungary literally went up in flames as his car caught fire early in qualifying.
Just minutes into the session at the Hungaroring, Hamilton's Mercedes was ablaze at the rear, and although he attempted to crawl back to the garage, it proved futile.
Hamilton was forced to stop on the pit lane entry road where marshals quickly used extinguishers to douse the fire, started by what Mercedes claimed to be a fuel leak.
As the Briton looked on, and even though the visor was down on his helmet, you could sense his bitter pain and disappointment as he shook his head disconsolately before trudging away.
It was yet another brutal blow for Hamilton in his bid to overhaul Mercedes teammate Nico Rosberg in this year’s battle for the Formula One world title.
Sebastian Vettel thinks Nico Rosberg's pole lap proves Mercedes masked its true pace in practice and admits his only chance of victory from the front row in Hungary is if it rains on Sunday.
Vettel was briefly on provisional pole in the closing moments of Q3 on a track which had been getting quicker and quicker after an earlier spot of rain, only for Rosberg to go top of the timesheets by a full half second with his final run. Rain and thunderstorms are forecast for Sunday's race and Vettel thinks that could be the only thing to put Red Bull in the mix for a victory.
"We are here to fight," Vettel said. "But if it rains we definitely have a better chance there than in standard, normal dry conditions but then we were closer this weekend in outright pace. It's hard to judge if they were sandbagging or running different modes on Friday. It should be closer than the last couple of races but we should have a good fight with the Williams, which has been a bit out of race in the last few races."
After being a distant third behind the resurgent Williams in the last three races Vettel emerged victorious in a tussle with Valtteri Bottas for second, but he is still disappointed by the gap out in front.
"I think probably the nature of the track suits us a bit more - less straights. Historically we have always had a competitive car around here. It seems that we are a little bit closer but obviously Nico's final lap was very good so the gap was again quite big, bigger than we were hoping for because it looked like if we got everything got everything perfect and Nico had a bit of a wobble we could have a crack but it didn't happen, they did a good job. Q3 was a mixed bag, could have been anything, therefore with the dry conditions at the end to get P2 was the optimum."
That was a very tough Qualifying session today - especially with the rain at the beginning of Q3. It's difficult to judge which braking point is best in changing conditions so I was a bit over the limit at times - especially into Turn One. I was lucky there, but in the end I nailed the last lap so I'm quite happy to be starting from pole. On the other side, it's a real shame for Lewis and the team. I know how much it hurts to have technical failure where there is nothing you can do as a driver. We need to sort out the reliability issues but I know that tonight there will be great team effort to fix his car - just like in Hockenheim where the whole garage pitched in to help rebuild it. It takes away a bit of the excitement when there is no gloves-off battle because that's what we are here for. But tomorrow is a long race and I'm sure that Lewis can get another good result.
I can't really believe it today, there was just nothing I could do. There was an issue with the car as I was coming out of the second to last corner and then the engine just cut out. I thought we could get it back to the garage but then I looked in my mirrors and saw the whole rear end was on fire and that was it. Now we need to see what damage has been done to the car tonight and see whether the gearbox or engine needs to be changed. It's getting to the point where it's beyond bad luck now - as a team, we need to do better. Tonight, I need to somehow find the way to turn this into a positive for tomorrow, then build on that going into the race. It will be a very difficult afternoon as it's one of the hardest circuits to overtake on. But these things are sent to try us and how I come out of it is going to be the most important thing.
Let us start with the positive note of this afternoon and congratulate Nico for a very controlled pole position. In the final runs, it was all about finding the right balance between risk and reward. He used the first run to understand the track conditions, then on his second run set three purple sectors for a very strong pole position. It was a classy job. On the other side of the garage, I was devastated for Lewis. The team has been working so hard to deliver the best possible car for both drivers so it is upsetting to see him suffer another problem in qualifying. A Mercedes in flames is not what we want to show the world - but just as importantly, it's not the standard we set for ourselves in the team. I apologize to Lewis and to all his supporters for this problem which has given him another mountain to climb tomorrow. But we know that if anybody can do it, Lewis can. We will be burning the midnight oil to give him the best possible car and strategy for the race.
I am absolutely gutted that we have let Lewis down again and given him such a tough job on another Sunday afternoon - so soon after his fantastic drive in Germany. We are still stripping the car to understand the cause of the fuel leak but the symptom was a loss of high pressure fuel to the direct injection system of the internal combustion engine. This fuel leak then caused a major conflagration which is likely to have written off most of the car. We will obviously be doing our very best to give Lewis the car and the strategy necessary to make the best possible recovery in the race tomorrow. On the other side of the garage, the rain in Q3 brought a stressful twist to the session in its closing minutes. Nico was under a lot of pressure from the changing conditions and some very competitive laps from Red Bull and Williams. But he delivered a fantastic lap time in the end to take another pole position, so well done to him. Overall, however, a huge apology to Lewis and his fans for our failure today.