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This paper presents a novel control strategy for the operation of a direct drive permanent magnet synchronous generator (PMSG) based stand alone variable speed wind turbine. The control strategy for the generator side converter with maximum power extraction is discussed. The stand alone control is featured with output voltage and frequency controller capable of handling variable load. The potential excess of power is dissipated in the damp resistor with the chopper control and the dc link voltage is maintained. Dynamic representation of dc bus and small signal analysis are presented. Simulation results show that the controllers can extract maximum power and regulate the voltage and frequency under varying wind and load conditions. The controller shows very good dynamic and steady state performance.