Originally settled by members of the S'Kallam tribe, Port Ludlow was named in 1841 by Lieutenant Charles Wilkes during the first U.S. Navy expedition to map and chart Puget Sound and the waters around the Olympic Peninsula. Lieutenant Wilkes, (an inveterate name who also gave Elliott Bay its name) liked to pepper his maps with the names of crew members, friends and often, people he simply admired.
Thus, he bestowed Port Ludlow with the name of a naval officer, Lt. Augustus C. Ludlow, who died in the War of 1812. In addition to naming Port Ludlow, Wilkes also provided this area with one other footnote in history: Wilkes' obsessive personality and harsh discipline with the cat-of-nine-tails whip reportedly made him the model for Herman Melville's character, 'Ahab' in Moby Dick. In 1853, Port Ludlow became the site of one of the Northwest’s earliest sawmills.
The mill supplied lumber to pioneers and settlers until 1878, when Andrew Pope and Captain William Talbot purchased and invested heavily in renovating the operation. Pope & Talbot, as the venture came to be known, transformed the small mill into a thriving logging, milling, and shipping enterprise. Port Ludlow became a swash-buckling shipbuilding town and with the money came businesses, churches, and plenty of social options from card playing to dance halls and bawdy houses. During this era, many homes were built for workers in the eastern style of the owners' hometown of East Machias, Maine.
During the Great Depression, the mill lost business and the owners were unable to fund new equipment to keep the operation competitive. It was finally closed in 1935. Many of the homes constructed during Port Ludlow's glory days were loaded onto barges and transported across the Hood Canal to Port Gamble or Bremerton for military housing. By 1950, Port Ludlow had declined to a near-ghost town, though farmers and small logging businesses still operated in the area.
The 1950's brought a new beginning to Port Ludlow with the increasing value of Port Ludlow’s Real Estate. Also the post-war population growth created a market for recreational home sites and property.
In the early 1960s, a floating bridge was constructed to span the Hood Canal. The bridge became an economic lifeline for the eastern part of the Olympic Peninsula, providing easy access from Kitsap County and the greater Puget Sound area. In 1966, Pope & Talbot recognized that Port Ludlow’s unique water and mountain views and pristine natural environment — now with a fast bridge connection — would provide a spectacular place for a residential community. Thus, they began the first phase of a planned residential community at the site of the original Port Ludlow mill.