Martin finished in second, with his lead shrinking from 18 to 15 points.
Spanish legend Marc Marquez crashed on the second lap but remains third overall.
Marquez, who is teaming up with Bagnaia next year, was not injured after his rear tyre appeared to clip the edge of the track before he came off.
Another Spaniard Maverick Vinales finished third in the 13 lap sprint, the appetiser to Sunday's 26-lap Grand Prix race.
Bagnaia led from the start and gave a faultless performance in near perfect conditions on the legendary Dutch track, known as 'The Cathedral', packed with tens of thousands of fans.
"It's been a perfect two days, but we still have tomorrow," Bagnaia said after the sprint.
"At the moment it looks like a very good weekend. My bike is working perfectly and the set-up in the last few races is working very well," added the 27-year-old Italian.
The only drawback, Bagnaia said was losing some grip on his front tyre "but we managed. The pace in the sprint was incredible."
After the race Martin admitted Bagnaia, who considers Assen as one of his favourite tracks, would be hard to beat on Sunday.
"At the moment he is really strong, but there may be some places on the track where I could pass him," Martin said.
Martin, who'll be riding for Aprilia next year, said like Bagnaia he too had some grip issues in the fast corners of the sweeping 4.5 kilometre track.
Bagnaia's factory Ducati team mate Enea Bastianini was fourth.
Fabio Di Giannantonio on a Ducati VR-46 machine came fifth after having to ride a double qualifier on Saturday morning.
Behind him was South Africa's Brad Binder in sixth on a KTM, followed by Fabio Quartararo on a Yamaha and Alex Marquez on a Gresini Ducati.
Quartararo and Marquez swopped places after Marquez exceeded track limits and had to ride a long-lap penalty but failed to do so.
He was then penalised by three seconds at the end of the sprint.
The top 10 is completed by Prima Pramac Ducati's Franco Morbidelli and Spanish rising star Pedro Acosta riding for the Red Bull GasGas Tech 3 team.
