A dynamic procedure for the Lagrangian Averaged Navier-Stokes-$alpha$ (LANS-$alpha$) equations is developed where the variation in the parameter $alpha$ in the direction of anisotropy is determined in a self-consistent way from data contained in the simulation itself. The dynamic model is initially tested in forced and decaying isotropic turbulent flows where $alpha$ is constant in space but it is allowed to vary in time. It is observed that by using the dynamic LANS-$alpha$ procedure a more accurate simulation of the isotropic homogeneous turbulence is achieved. The energy spectra and the total kinetic energy decay are captured more accurately as compared with the LANS-$alpha$ simulations using a fixed $alpha$. In order to evaluate the applicability of the dynamic LANS-$alpha$ model in anisotropic turbulence, a priori test of a turbulent channel flow is performed. It is found that the parameter $alpha$ changes in the wall normal direction. Near a solid wall, the length scale $alpha$ is seen to depend on the distance from the wall with a vanishing value at the wall. On the other hand, away from the wall, where the turbulence is more isotropic, $alpha$ approaches an almost constant value. Furthermore, the behavior of the subgrid scale stresses in the near wall region is captured accurately by the dynamic LANS-$alpha$ model. The dynamic LANS-$alpha$ model has the potential to extend the applicability of the LANS-$alpha$ equations to more complicated anisotropic flows.