The Spaniard has already secured the runner-up spot in the world standings and managed to beat compatriot and world champion Jorge Lorenzo into second place with a blistering time of one minute 30.844 seconds.
Pedrosa's team-mate Casey Stoner will start his final race in the sport from third after deciding he wanted to retire at the end of the season.
The 27-year-old Stoner looked like securing a dream pole in his last race as he topped the timesheets heading into the final moments of the qualifying session.
But Pedrosa's record time and a decent final effort from Lorenzo meant Stoner was relegated to third, with a Spanish one-two secured in front of the fans in Valencia.
Friday's practice sessions had been dogged by rain but on a clear day on Spain's east coast the riders were able to set competitive dry laps.
Cal Crutchlow put his Monster Tech 3 Yamaha fourth on the grid with Honda MotoGP rider Stefan Bradl beating Crutchlow's team-mate Andrea Dovizioso into fifth.
Ducati's Nicky Hayden claimed seventh spot with Alvaro Bautista (Gresini Honda) and Hector Barbera (Pramac Ducati) joining him on the third row.
The top 10 was rounded out by the Power Electronics Aspar of Aleix Espargaro with Ducati's Valentino Rossi 11th and Lorenzo's team-mate Katsuyuki Nakasuga struggling down in 16th.