Spaniard Martin had picked up from where he left off by eclipsing his lap time from Tuesday to clock one minute and 57.273 seconds on his Ducati machine barely an hour into Wednesday's session under scorching conditions in Malaysia.
Martin's record lasted for seven hours until Bastianini blitzed through the track to set one minute and 57.134 seconds on his Ducati Lenovo to ensure the day belonged to him.
South African Brad Binder completed the top three just under a hundredth of a second behind Martin, while Aprilia's Aleix Espargaro came in fourth ahead of reigning world champion Francesco Bagnaia in fifth.
Bastianini, who also won last year's Malaysian GP, smiled when asked by reporters if he could dip to one minute and 56 seconds.
"It can be possible but we will first have to see how the track conditions are. It will be interesting to see if we can do the 56. It is important to be fast on the lap time, I am happy about this. I am more confident on the bike this year," he said.
"I know what to expect. There will be pressure to always do a faster lap, but you also have to stay calm," Bastianini added.
Martin, meanwhile, was looking forward to further fine-tuning his bike ahead of Thursday's session.
"I hope tomorrow we can understand the way to go and maybe do some changes on the bike to improve the feeling," he said.
The final day of testing takes place tomorrow.
