A method for controlling a wind turbine connected to an electrical grid includes receiving, via a controller, a state estimate of the wind turbine. The method also includes determining, via the controller, a current condition of the wind turbine using, at least, the state estimate, the current condition defining a set of condition parameters of the wind turbine. Further, the method includes receiving, via the controller, a control function from a supervisory controller, the control function defining a relationship of the set of condition parameters with at least one operational parameter of the wind turbine. Moreover, the method includes dynamically controlling, via the controller, the wind turbine based on the current condition and the control function for multiple dynamic control intervals.