The Coast Guard responded to a distress call from a burning boat east of Port Angeles at 6pm Tuesday.
A medium response boat and rescue helicopter arrived on the scene 15 minutes later and got three men off the 48-foot yacht.
The response crew suppressed the fire and took the boat in tow.
The fire re-flashed during the tow to Port Angeles and the response crew was forced to break tow as flames engulfed the yacht.
It burned and sank, leaving no visible fuel sheen on the water.
One of the men rescued was examined for smoke inhalation.