The present subject matter is directed to a system and method for operating a wind turbine. More specifically, the system and method determines a dynamic cut-in wind speed for the wind turbine based on one or more environmental conditions. In one embodiment, the method includes providing a predetermined cut-in wind speed for the wind turbine based on at least one estimated environmental condition for a wind turbine site; determining one or more actual environmental conditions near the wind turbine for a predetermined time period at the wind turbine site; determining a variance between the at least one estimated environmental condition and the one or more actual environmental conditions; calculating a dynamic cut-in wind speed based on the variance; and, operating the wind turbine based on the dynamic cut-in wind speed so as to increase wind turbine operational efficiency.