Verstappen, who celebrated his 20th birthday a day earlier, overtook pole-sitter Hamilton on lap four before clinching the second victory of his career and first this season.
Race leader Verstappen reacted the next lap, taking the softs, too, and rejoining ahead of Hamilton.
The Red Bull of Verstappen was third on his 20th birthday, nearly half a second behind Raikkonen. The race seemed destined to play out without any late drama, but while TV cameras followed Verstappen on his way to the win and his celebration lap, Lance Stroll made contact with Vettel, who ended up with one of his wheels on top of his vehicle. He has also become the final Malaysian GP victor as the race was removed from the calendar. "It's part of motor-racing", said Vettel putting a courageous face on the latest setback to strike his championship challenge. "We should have won today but we didn't have the pace", he said. "We have lost so much pace this weekend".
"So I was very happy when I crossed the line and together with my dad I got this far and of course I got the great help from Red Bull".
"I think it is unknown at the moment".
Pilot Mercedes Lewis Hamilton showed the best result during qualifying heats at the Grand Prix of Malaysia. Hamilton, however, still accomplished what he came to do-extend his lead over Sebastian Vettel in the championship race, with Hamilton finishing second in Sepang and Vettel down in fourth place.
"I didn't really know how close Max was and I was having some problem at the beginning of the race, struggling with battery power".
"From then on, I had awesome pace, pushed hard every lap to try and manage the tires and maintain the gap over Stroll, and I managed that until the end".
"I did everything I could to maintain position".
Before the race Kimi Raikkonen was a strong favourite to challenge for victory, but he didn't get to turn a single lap in anger as his vehicle developed a problem on the grid and he was out before the race had even started.
But his path to a fourth world title may be more straightforward than he thought, with rival Sebastian Vettel facing a possible penalty for the next race in Japan after colliding with Williams' Lance Stroll when the race had ended.
Behind, Valtteri Bottas was fifth in his Mercedes, slipping back after a strong start saw him jump to third and challenge Verstappen for second. He had a freakish collision with Williams' Stroll after the finish that left his vehicle on three wheels and could have big repercussions if the gearbox is damaged.
In a double blow for the Italian team, Kimi Raikkonen was unable to start the race at all because of a mechanical failure on the starting grid.
Five more rounds remain in the championship this season with the next race being held at Suzuka this week.