Short answer: No.
You could stand up a Storage Gateway in a VPC and mount S3 that way but it probably not be cost effective.
What's stopping you from copying the file to the /tmp directory in your Lambda function and operating on it there? You can increase the size of the storage in /tmp - again, for a fee but it's less expensive to do it that way.
How big are the files and how often do you process them?
S3 doesn't provide a file interface to access the buckets natively. There are two ways that come to mind using AWS services. One you already mentioned (download method). Other option is to use FSx Lustre and link it to S3 bucket. Here are some references that detailed the integration: https://aws.amazon.com/blogs/aws/enhanced-amazon-s3-integration-for-amazon-fsx-for-lustre/ https://aws.amazon.com/fsx/lustre/ https://docs.aws.amazon.com/fsx/latest/LustreGuide/create-dra-linked-data-repo.html
You can deploy FSx for Lustre in Scratch or Persistent mode. https://docs.aws.amazon.com/fsx/latest/LustreGuide/using-fsx-lustre.html
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