Harry Lunn, one of the world's leading photography dealers and an art dealer in Washington since 1968, will close his gallery here in July, he said yesterday.

Lunn will continue to deal privately--in art, photography and decorative arts--from New York, where he plans to take an apartment, and Paris, where he currently lives. "Frankly, I'd like to spend more time in Paris," said francophile Lunn, who also owns a home in Normandy.

"This is not an abandonment of Washington, but a rationalization of my life," said Lunn, 49, who is Ansel Adams' principal dealer and is credited with helping launch the recent boom in vintage photography sales, now abated by the recession.

"We're still a profitable operation, but no longer at a peak," he said. In 1979-80, Lunn's top year, the gallery grossed $2.85 million. In 1968, his first year as a print dealer on Capitol Hill, his gross was $65,000. He would not reveal figures for the current year.

"The retail market is tough, and it's tough for everyone. People who are honest will tell you that even people with money are hanging onto it. I'm not leaving photography, but I'm getting into other things as well. Why not?"

Lunn currently is showing drawings, furniture and stained-glass windows by architect Frank Lloyd Wright in his establishment at 406 Seventh St. NW, one of the handsomest gallery spaces in town.

"But I don't want to run a public gallery anymore and haven't for some years," said Lunn. Dealing worldwide from his Washington base, Lunn has never made a secret of the fact that sales to Washingtonians constituted only a minuscule part of his business. "The gallery is an unproductive use of my time. What's the point? There's no response here."

Graphics International, the corporation that owns the Lunn Gallery's inventory, was in fact put on the market in 1979 through the New York investment house of Neuberger and Berman with an asking price of $6 million. It was not sold.

"I am able to do this now because I have reacquired all outstanding shares of Graphics International, making me the sole owner," said Lunn. "By agreeing to let the eight remaining shareholders there were once 18 take their profits and go, I could give up an elegant but expensive gallery, a number of employes and concentrate on selling inventory to other dealers. I'll be running a smaller operation and coming out just as well in the end.

"But I intend to continue doing exhibitions in kindred spaces for other dealers and, as I move about and get ideas, I'd be very interested in providing exhibits for colleagues in town. I have a loyal clientele here.

"The state of the market is such that fine, rare things are easy to sell, but there is no market for minor material. I'm positioning myself for the next 10 years; it will be an international market for rarity."