Methods and systems for optimizing operation of a wind farm are disclosed. The method includes providing a farm-level wake model for the wind farm based on historical wake parameters corresponding to reference sets of interacting wind turbines in the wind farm. Another step includes monitoring one or more real-time wake parameters for wind turbines in the wind farm. A further step includes identifying at least two interacting wind turbines from the reference sets based on the wake parameters. Another step includes determining a wake offset angle between the interacting wind turbines as a function of at least one of a wind direction, a geometry between the interacting wind turbines, or a wake meandering component. The method also includes continuously updating the wake model online based at least partially on the wake parameters and the wake offset angle and controlling the interacting wind turbines based on the updated wake model.