FP3 pacesetter Quartararo set the early pace with a 1m37.064s, which was immediately beaten by Marquez with a 1m37.006s.
The Petronas Yamaha rider dove below the 1:37 mark on his second flying lap to reclaim provisional pole with a 1:36.993, while Pramac’s Francesco Bagnaia put his Ducati into third place despite failing in the last corner met a slower Valentino Rossi.
Marquez returned to the lead with a. 1m36.877s on his first lap of his second heat, although this was beaten by Maverick Vinales, who put in a brilliant final sector to finish with a 1m36.844s.
With about a minute to go, Pramac’s Jack Miller was on a lap fighting for pole but suffered a quick crash at Turn 11.
Just seconds later, Alex Rins fell in the same spot and had to be taken to the back of an ambulance while holding his wrist.
Amid the drama, Quartararo produced a 1m36.705s to beat the lap record he set in FP3 and secure his second straight Jerez pole.
Vinales stayed in second while Marquez completed the front row ahead of Bagnaia – whose fourth place is a career-best qualifying result.
Miller will start alongside him in fifth despite his crash, while LCR Honda’s Cal Crutchlow is just 0.001s adrift in sixth.
Pol Espargaro came through Q1 alongside Rins to put his KTM in seventh place ahead of the factory Ducati of Andrea Dovizioso who crashed late at Turn 2.
Rins was ninth, although his start now looks in doubt, while Franco Morbidelli (Petronas), Rossi and Joan Mir (Suzuki) completed the top 12.
Brad Binder briefly held the best time in Q1 and eventually qualified an impressive 13th for his MotoGP debut on the KTM after missing out on a place in Q2 by just 0.138s.
The 2016 Moto3 World Champion beat Danilo Petrucci’s factory Ducati while Takaaki Nakagami finished 15th on his year-old LCR Honda.
Aleix Espargaro was top Aprilia in 16th while teammate Bradley Smith was 18th after suffering a highside crash at Turn 2 in the closing stages.
Johann Zarco also suffered a late crash that prevented the Avintia Ducati rider from moving up to his 20th place ahead of Honda rookie Alex Marquez and Iker Lecuona’s Tech3 KTM.