1. La Droguerie at 9 et 11 rue du Jour
Ultimate craft mecca. It's located near Les Halles, and is a useful antidote to the urban wasteland that was created in the heart of Paris when they tore down the traditional marketplace in the 1970s.
Les Halles before
Les Halles now
Fortunately La Droguerie is as traditional as they come. No self-service, you have to line up to be served individually in each section. Buttons, beads and ribbon don't take too long, but there is often quite a line at the front of the shop for yarn service. They sell patterns as well, but you can't buy the patterns separately from the yarn - unless you get a book - though you can buy the yarn without a pattern). You pick out a pattern and the assistant takes the yarn to the back of the shop to reel off the exact amount you need.
Their yarn is very nice (especially the DK linen, which comes is a range of vibrant shades), so definitely worth the wait, and I've never seen so many buttons and ribbons in one place.
(And incidentally, if you are looking for kitchenware there is an amazing kitchen shop just around the corner, E. Dehillerin at 18 et 20 rue Coquillière, where you also get that good old-fashioned personal service.)
2. Le Comptoir at 26 rue Cadet
I discovered this shop on my last trip to Paris in February. This is another craft-lovers paradise, but quite a bit smaller than La Droguerie, so not as many crafts are covered. The proprietor seems to specialise in knitting and cross stitch, so the shop is tailor-made for my tastes. I have to borrow one of her photos from her blog, because it shows off the shop to such perfection.
3. L’OisiveThé at 1 rue Jean-Marie Jégo
I went on quite the trek to find this place the last time I was in Paris. I would have been fine if I had just brought a decent map - but this shop is in the 13th arrondisement, which is way off the radar of most tourist maps, plus it's in les Butte aux Cailles, a particularly higgledy-piggledy neighborhood. I ended up circling the whole neigborhood before finding it, but never mind, I'm used to getting lost in Paris (it's really the best way to get to know a town). When I finally arrived I decided I deserved cake. I went with the chocolate cake with vanilla ice cream, accompanied by a very chi chi Chinese tea. It was heavenly.
The yarn wasn't bad either, though unfortunately by this point in my trip I had already spent all my money at the previous two yarn shops, so couldn't really indulge in more than one skein of yarn. Which was a pity, because they carry all sorts of American yarns I'm not familiar with, including Lorna’s Laces, ShiBui Knits and Koigu.
4. Department stores
Galleries Lafayette has a small craft section upstairs, and Bon Marché has quite a good yarn section, and additionally carries La Droguerie notions. They didn't seem to have any lace or 4-ply yarn, though (other than mohair).
5. Company stores
In France yarn is often sold in company stores. One of the ones I'm familiar with is Phildar. I've been to the Phildar on 68 rue Monge (not too far from the jardin des plantes, which is also well worth a visit, particularly during iris season). Phildar carries mostly acrylic blends, so I've never bought any (I'll admit it, I'm a yarn snob), but their patterns are quite fashionable and funky (not that I've knit any yet - I have not yet been brave enough to make that leap to knitting in a foreign language). Other companies are Katia and Bergere de France, but I haven't seen any of their shops in Paris.
And that is all the yarn I know of in Paris (so far). Happy shopping!