This paper presents dynamic modeling and simulation of a grid connected variable speed wind turbine (VSWT) using PSCAD/EMTDC, a widely used power system transient analysis tool. The variable speed wind system with a direct-drive generator and power electronics interface is modeled for dynamic analysis. Component models and equations are addressed and their implementations into PSCAD/EMTDC are described. Controllable power inverter strategy is intended for capturing the maximum energy from varying wind speed and maintaining reactive power generation at a pre-determined level for constant power factor or voltage regulation. The component models and entire control scheme are constructed by user-defined function provided in the program. Simulation studies provide control performance and dynamic behavior of a gearless VSWT under varying wind speeds. In addition, the system responses to network fault conditions have been simulated. This modeling study can be employed to evaluate the control scheme, output performance and impacts of a VSWT on power grid at planning or designing stage.