World champion Hamilton stormed to pole with a record lap of one minute 21.164 seconds at Albert Park, with a gap of more than six-tenths of a second to the second placed Ferrari of Kimi Raikkonen.
Edged out by Ferrari's Sebastian Vettel in the second qualifying session, Briton Hamilton improved his lap time by nearly a second in Q3, leaving Ricciardo and his other rivals stunned.
"That sucks," said the Western Australian, who finished almost a second off Hamilton in fifth and will start Sunday's race in eighth due to a grid penalty.
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"It's frustrating because I think everyone else wants to see them get challenged a bit more, so that was a little bit of a punch in the stomach to everyone.
"I didn't expect that much," Ricciardo added, referring to Hamilton's improvement in the last session.
"I knew they had a bit more, I expected them to be more than two-tenths quicker than us.
"That (margin) was like throwing a pie in everyone's face.
"I know that obviously they're loving it, they're in a good position, but everyone else is hating it.
"Hopefully we can catch up, hopefully in the race they don't have as much of that, because that's a bit scary, that (engine) mode they've got. We've got to try and figure it out."
Hamilton denied Mercedes had triggered a different engine mode for Q3, which has been nicknamed the 'party mode', but was contradicted by team boss Toto Wolff.
Wolff, however, put the dramatic pace jump from Hamilton's first effort in Q3 to his pole-winning second run down to brilliant driving.
"There is a party mode in the car, we switched the party mode on in Q3," the Austrian told reporters.
"There was no difference from the first run in Q3 to the second run in Q3, he just said that he had a great lap, pulled it all together, carried more speed through the apexes.
"The gap was down to Lewis Hamilton putting in a lap with the grip level that he didn’t seem to be able to extract before.
"Everything was in the sweet spot, I guess. There wasn’t any difference in modes."
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