Whats the simplest way to create a data validation list from a comma
separated text present in another cell? The text in this cell is
dynamic and keeps changing.

I can think of breaking the text by using MID, FIND, IF into multiple
cells and then using the multiple cells as source to the Data
Validation.

Assuming for this example that your selected range is A1:A10 with A1 the
active cell and that your comma delimited list is in H1, selecting Custom
from the Allow combo box and placing this formula...

=ISNUMBER(SEARCH(","&A1&",",","&$H$1&","))

in the Formula text box appears to do what you asked.

Rick