In order of distance from Port Townsend:
Henery's Do It Best
A combination of housewares like canning supplies and building and repair items, like Romex wire. No lumberyard, but they do have a little plywood and a few types of dimensional lumber. Tool rentals, too. Prices are usually higher than elsewhere (but not always). Staff is awesome.
Arrow Lumber
Wood! Framing, decking, sheathing, furniture, boats. Some other building supplies like concrete, shingles, nails.
Edensaw Woods
If you want a very specific wood, this is the place to get it. They also sell Festool and fancy hand tools.
Carl's Building Supply
A wide selection of wood products and fasteners. Some plumbing and electrical. Huge array of Simpson Strong-Tie items.
Hadlock Building Supply
Retail oriented like Henery's, but with a lumberyard attached. Worker owned. Nice staff.
Double-D electric
Electrical contractors with a small retail operation. If you need a special electrical item, you can find it here.
Home Depot
You'll have to go to Sequim. Just about everything you can find there, you can get at one of the local places.