The Importance of being made in the image of God
Why is it important to know that we are made in the image of God? The incarnation hangs on it. Christ taking on human flesh is essential to reconciling God to man.
We are created in God's Image (Genesis 1:26) but the image of God in sinful man is marred-- it’s not gone, but it is no longer pure. Man can’t make it right. But Jesus takes on flesh in the likeness of God and is the exact imprint of his nature. He is not stained by sin so he is able to be the one who restores men and women with God.
Anthony Hoekema writes, “That God could become flesh is the greatest of all mysteries, which will always transcend our finite human understanding. But, presumably, it was only because man had been created in the image of God that the Second person of the Trinity could assume human nature… it would seem [that Jesus] could not have have assumed a nature that had no resemblance whatever to God. In other words, the incarnation confirms the doctrine of the image of God.” (Created in God's Image, Anthony Hoekema, p.23)