Alonso edged out Lewis Hamilton's McLaren by 0.105 seconds with Nico Rosberg third fastest for Mercedes in front of Jenson Button's McLaren.
Sebastian Vettel had bettered Alonso in the morning but was half a second behind when the cars fixed the softer tyres in the afternoon.Alonso, a two-time winner in Monaco, seemed resolute to bend the track to his will and hurtled his Ferrari round in one minute and 15.1234 seconds.
At last Sunday's Spanish Grand Prix, he had led for 18 laps but in the closing stages found himself lapped by the Red Bulls and McLarens because of Ferrari's declining race pace, especially on the hard tyres.
Alonso was sure he could deliver a consistent challenge in Monaco because this is a track that demands mechanical grip and precise driving somewhat than aerodynamic efficiency - an area where Adrian Newey's Red Bull excels.
"He's magic round here," said Team Lotus reserve Karun Chandhok. "His hands are a blur at the wheel.
Chandhok, who was working for BBC Radio 5 Live as an analyst on Thursday, added: "Fernando is a real street fighter on the eventual street circuit on the calendar. He is a master of controlled aggression behind the wheel."
Alonso was not able to take part in qualifying in Monaco last year after a heavy crash through practice but he still managed to cross the line in sixth in spite of starting in the pit lane.
