This paper presents a model-based dynamic optimization study of the operation of an outdoor open pond for microalgae cultivation. A nonlinear mathematical model based on first-principles for predicting the growth of microalgae in open ponds is developed and validated against literature data. To account for the impact of weather vagaries on the cultivation of microalgae, data for local climatic conditions is incorporated into the model. The supply of dissolved CO, to the algal culture from a CO, rich gas is modeled as well. Optimal monthly operating profiles for the dilution rate, CO, gas flow rate, and makeup water flow rate are determined based on minimization of the cultivation cost. The case study included in the analysis is for cultivating Nannochloropsis Salina over an annual production cycle in California, United States of America. The dynamic optimization identified a set of operation profiles that reduced the cultivation cost by at least 15% as opposed to relying on heuristic approaches for improving operation.