The Reformation Doctrine of Justification: An Overview 
The heart and soul of Reformation theology was its doctrine of justification--how an individual sinner should enter into fellowship with God. This doctrine, more than other, distinguished Luther and his followers from the medieval doctrines that had preceded it. It also gave an underlying unity to the reformers, who soon found ways to disagree about nearly everything else. According to the historian of theology, Berndt Hamm, this doctrine can be broken down to ten propositions[1]:

1. The Unconditionally Given Acceptance of Mankind
2. Radical Sin
3. Grace Preceding Perfect Righteousness
4. Simul iustus et peccator: At Once Just and Sinner
5. The Eternal Validity of Justification
6. Certainty of Salvation
7. Freedom and the Absence of Freedom
8. By Faith Alone
9. Faith and the Biblical Word
10. The Evangelical Understanding of the Person

1. The Unconditionally Given Acceptance of Mankind
This is the idea that the forgiveness of sins and eternal life are given unconditionally for Christ's sake and do not depend on the worthiness of the sinner. Rather than rest on the condition of the individual, forgiveness depends solely on the mercy of God and the righteousness of Christ interceding for the sinner. In the medieval Catholic theology, broadly speaking, justification never happened without cause in a human process of sanctification (i.e., confession of sins, absolution, and penance) and with it the renewal of human morality. Thus a human being obtains forgiveness as the reward of good works and abstinence from mortal sin. These are the propositions that the reformers disputed: there can be no valid cause for man to be justified before God, they argued. God's acceptance of his creations is not subject to their actions or conditions. It is prior to all human reasons.
2. Radical Sin
Closely related to unconditionality of acceptance is the idea that human beings are utterly and radically sinful. This by itself was hardly new to the sixteenth century. Rather, the novelty of reformation doctrine was to redefine sinfulness from human condition to essence, impervious to alteration by mere human remedies. Only the infusion of divine grace has the power to restore the bond between God and humans, broken by original and mortal sin. Luther was particularly emphatic on this point, that sin was a innate tendency of all humans that defined the whole person until death.
3. Grace Preceding Perfect Righteousness
Divine grace is the precise opposite of radical human sinfulness. Just as sin defines the whole human, justifying grace is nothing other than God himself and his mercy. God is not made in man, let alone earned, but is a new standing in the sight of God. As sinful beings, humans are necessarily guilty before God, grace can have no foundation based in them. Even if humans could obey the law of God and therefore owe nothing to divine grace, as created beings they would still not be worthy or deserving of grace. Why bestow grace, then? Here is where the righteousness of Jesus Christ comes in: his intercession on behalf of humankind alone is the cause of justification, it alone provides satisfaction for sin and wins merit for the sinner. The righteousness that results from justification is, therefore, is wholly derivative: human beings acquire it only through Christ and never on their own merits. Grace, in short, precedes righteousness. Righteousness is "alien."
4. Simul iustus et peccator: At Once Just and Sinner
Behind the concept of "alien righteousness" is a radical idea that human beings, the saved as well as the damned, can inhabit several states of being simultaneously. It cannot be otherwise, given the doctrines of acceptance, radical sin, and grace: Christians, according to the reformers, are both wholly sinful and righteous through faith. Their righteousness wrestles with sin, and liberates them from their sinful natures at death. But until then, humans who have faith are both sinful and righteous at once. This idea is captured in Luther's phrase simul iustus et peccator--"a just man and at the same time a sinner." 
5. The Eternal Validity of Justification
Since justification is the unconditional acceptance of the sinner for Christ's sake and not because of any quality in a human's life or morals, it is always to be found in God. For this reason, the doctrine of justification takes on eschatological meaning--i.e., it is placed in connection with the final act of the divine plan, or eschaton. Medieval theology had distinguished between justification (the day-to-day process of removing sin and acquiring merit through obedience to divine law) and sanctification (the future acceptance or rejection of human beings at the Last Judgment). Reformation theology brought these two together: because acceptance is unconditional and justification dependent solely on eternal divine grace, the sinner has already been accepted for salvation in advance of her/his renewal through justification and despite the enduring power of sin. Luther expressed this idea by saying that in the divine act of justification, the sinner becomes "righteous and saved," that is not righteous now and saved at some future date, but already the recipient of righteousness and salvation in faith.
6. Certainty of Salvation
Salvation means the unconditional, final, and irreversible acceptance of the sinner. This unconditional quality makes it possible for the reformers to equate the certainty of salvation with the certainty of belief: because the worthiness of the sinner is irrelevant to justification and solely contingent on divine grace, the reformers argued, the sinner's attention is diverted away from contemplation of her/his own sinfulness and toward Jesus Christ, the sole source of salvation. According to the medieval church, Christians could not enjoy a subjective certainty of their own salvation because they could not know for certain whether they had truly and fully removed the barriers to justification. Luther and the other reformers, by contrast, argued that because salvation is contingent solely on the gift of faith, salvation is certain to all who believe.
7. Freedom and the Absence of Freedom
Every reformation doctrine of justification is about freedom, above all freedom from all law, human as well as divine. As sinful beings, humans are unable to obey divine law on the strength of their own merits; to be human is to stand condemned for disobedience to the law. But because justification is given not according to human merit but according to divine grace, the believer is liberated from accusatory curse of disobedience to the law. On the other hand, radical sin robs humans of the will to do anything but sin, and in that sense humans are "free" only to sin. Humans have no moral autonomy. Only when human this freedom is taken away by faith do humans acquire the capacity to what is right and just. Once again, the unconditional gift of grace precedes human action.
8. By Faith Alone
The reformers insisted that salvation happened by faith alone. But doesn't that introduce an element of conditionality? Doesn't this mean that salvation is contingent, after all, on whether humans believe or not? For the reformers, faith is not something people do, it is something they receive. Faith, in their eyes, is not spiritual action but purely a receptive mode. This is not simply because faith is a gift of the Holy Spirit, but because the very nature of faith means that the sinner's attention is directed away from her/his inward state of sinfulness and toward the righteousness of Christ. In this sense, faith is the effect of grace acting on the soul. But this is another way of saying that salvation is not contingent on human qualities but on unconditional divine grace. Salvation "by faith alone" is a paraphrase of unconditional divine acceptance.
9. Faith and the Biblical Word
If everything hinges on faith, and faith is a passive mode, how do humans get it? In a word: from the Bible, directly or indirectly. Just as faith meant taking the sinner out of herself, the reformers argued that the source of faith was also objective and located externally in the Bible. This is the theological foundation of Reformation scripturalism: only in the Bible did faith have a firm foothold, hence conscience was bound solely to the word of God and free from all the words of men. Humans, after all, are wholly sinful; the only reliable source of faith is divine. It is the word of God that takes the sinner out of himself, that situates the sinner in the continuous flow of unconditional divine grace. When the reformers argued that humans receive forgiveness of sins and eternal life through the Bible, they meant to describe a dynamic relationship.
10. The Evangelical Understanding of the Person
Behind this understanding of justification and salvation lies a new view of the person. The medieval theology of justification understood the human person before God as a subject, reasonable and in voluntary possession of herself, with qualities deriving from her essence and an autonomous morality manifest in good works. To the reformers, justification entails a radical break with the innate qualities of the sinner: the person is accepted not because of this quality or that, but in spite of human qualities. The person is accepted solely and simply as she is.
Note: this summary is adapted from Berndt Hamm, "Was ist reformatorische Rechtfertigungslehre?," Zeitschrift für Theologie und Kirche 83 (1986): 1-38; printed in English translation as "What was the Reformation Doctrine of Justification," in C. Scott Dixon, ed., The German Reformation: The Essential Readings (Oxford: Blackwell, 1999), 53-90.
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