The championship's top two riders set a searing pace on the American circuit, both dipping into the low 1m21s - which is near outright record pace.
It seemed Lorenzo had done enough to secure top spot after two quick laps in succession allowed him to get down to a 1m21.498s, but three minutes from the end Pedrosa shaved off seven hundredths of a second to go top.
Casey Stoner also improved late on but still finished four tenths down on his Honda team-mate in third, while Ben Spies was a further 0.1s back in fourth.
Andrea Dovizioso beat Tech 3 team-mate Cal Crutchlow to fifth, although the pair were both more than 1s down on Pedrosa.
The large gaps down the field continued as Valentino Rossi sealed seventh for Ducati despite being a further half second down on Crutchlow, although LCR Honda's Stefan Bradl and team-mate Nicky Hayden - who announced a contract extension shortly before the session's start – both finished within one tenth of the Italian.
The same was not true of Gresini's Alvaro Bautista, more than two seconds down on Pedrosa, or of the CRT entries.
Colin Edwards was the top CRT representative but was 3.481s down, while wildcard entrant Steve Rapp found himself more than eight seconds in arrears in the early stages.
The two satellite Ducatis also floundered. On his return from injury Karel Abraham wound up 13th, while Toni Elias – standing in for Hector Barbera at the Pramac outfit – was two places further back.
Friday practice times:
1. Dani Pedrosa Honda 1m21.424s
2. Jorge Lorenzo Yamaha 1m21.498s + 0.074s
3. Casey Stoner Honda 1m21.829s + 0.405s
4. Ben Spies Yamaha 1m21.939s + 0.515s
5. Andrea Dovizioso Tech 3 Yamaha 1m22.609s + 1.185s
6. Cal Crutchlow Tech 3 Yamaha 1m22.672s + 1.248s
7. Valentino Rossi Ducati 1m23.216s + 1.792s
8. Stefan Bradl LCR Honda 1m23.249s + 1.825s
9. Nicky Hayden Ducati 1m23.310s + 1.886s
10. Alvaro Bautista Gresini Honda 1m23.537s + 2.113s
11. Colin Edwards Forward Suter-BMW 1m24.905s + 3.481s
12. Aleix Espargaro Aspar Aprilia 1m25.169s + 3.745s
13. Karel Abraham Cardion Ducati 1m25.215s + 3.791s
14. Mattia Pasini Speed Master Aprilia 1m25.488s + 4.064s
15. Toni Elias Pramac Ducati 1m25.816s + 4.392s
16. Yonny Hernandez Avintia FTR-Kawasaki 1m25.904s + 4.480s
17. James Ellison Paul Bird Aprilia 1m25.931s + 4.507s
18. Danilo Petrucci Ioda-Aprilia 1m26.125s + 4.701s
19. Michele Pirro Gresini FTR-Honda 1m26.421s + 4.997s
20. Randy de Puniet Aspar Aprilia 1m26.703s + 5.279s
21. Ivan Silva Avintia Inmotec-Kawasaki 1m27.102s + 5.678s
22. Steve Rapp Attack-Kawasaki 1m29.814s + 8.390s