It was Vettel's fourth win in the past five races at Suzuka. He got off to a rough start when he clipped Lewis Hamilton's right rear tire before Turn 1, forcing the Mercedes driver to retire after the ninth lap due to a puncture and associated damage.
Grosjean was bidding to become the first French driver to win a Grand Prix since Olivier Panis at Monaco in 1996.
Lewis Hamilton was withdrawn from the race after puncturing a tyre in a collision with runaway championship leader Vettel.
Hamilton's Mercedes seemed to only brush tyres with the Red Bull of Vettel as he tried to force his way through on the first lap but it soon became clear the damage to his car was significant.
The Britain plunged to the back of the field and was called in for an early pit-stop before eventually having to call it a day on lap nine.
"I had the best start I have had all year - such a good feeling, so really disappointed but that's life."
Top results
1. Sebastian Vettel (GER/RBR) 1hr 26min 49.301sec
2. Mark Webber (AUS/RBR) +7.129
3. Romain Grosjean (FRA/LOT) 9.910
4. Fernando Alonso (ESP/FER) 45.605
5. Kimi Raikkonen (FIN/LOT) 47.325
6. Nico Hulkenberg (GER/SAU) 51.615
7. Esteban Gutierrez (MEX/SAU) 1min 11.630