There are a couple pretty good yarn shops in Anchorage. Wooly Mammoth downtown is kind of high-end, but is the place to go for all-Alaskan yarn. Quilt Tree/Yarn Branch is good if you are bi-craftual, but they seem more quilty than they are yarny. In my opinion, Far North Yarn Company is the best LYS in town. They do not have a lot of Alaska-specific yarn, so they are not really the place for souvenir skeins. But they do have a very wide range of yarns, book and patterns, needles and other paraphernalia, and a great LYS atmosphere.
Located in a strip mall in the Spenard section of town, the outside does not look that promising, like many things in Anchorage. However, once you get inside, you can see that you are in a great yarn shop. The proprietresses are a mother and daughter (Kay and Annie), who preside over the shoppers as well as the constant and ever-changing group of knitters who hang out chatting and crafting. As I was taking the pictures below, I had to really work to not have anyone in the pictures (the table where everyone sits is behind the racks in the middle picture).
It is a pretty good sized shop, and it is jammed with yarn, books, more yarn, buttons, some more yarn, tools, and then some yarn. They have everything from basic, run of the mill workhorse yarn to fancy yarns featuring exotic fibers and the latest twists in yarn.
It is a friendly place, and both the owners and the revolving cast of crafters are glad to answer questions and help shoppers. They have classes on a pretty regular basis. I myself recently took their felted slipper class, of earlier post fame. To keep up with their class schedule, check their website, linked above, or look for them on Facebook, where they have a pretty active page.
If you are in Anchorage, and need yarn, tools, or just a place to hang out with other knitters, check out Far North Yarn Company!