Nowadays, technology evolution and deregulation of the electric utility industry enable distributed generation (DG) to play an increasing role in satisfying locally the power demand. In this paper, an optimal control method for variable speed wind turbines (VSWTs) in islanded mode of operation is presented. Aim of this control system is to minimize the necessary control action in order to track the active power demand. Consequently, reduced mechanical stresses and equipment damages are achieved, while system stable operation and reliability are ensured. The proposed control scheme can be applied to any type of pitch controlled VSWT. For evaluation purposes, it is applied to a VSWT equipped with a doubly fed induction generator. Finally, simulation results are presented and general conclusions are drawn.