The following was written in partial fulfillment of the requirements of Dr. Steve McKinion's Christian Theology II class at Southeastern Baptist Theological Seminary.
Put most simply, to be justified is to be right with God—to be “righteous”.
Being right with God is a complex and multifaceted reality. To understand it, however, one must understand how God is just and righteous, because Christian righteousness is Christ’s righteousness (2 Corinthians 5:21). God’s righteousness is intrinsic to him; it is expressed in his righteous deeds, most especially in judging justly. His justice, in turn, is expressed in the most gracious and merciful manner imaginable: he punished sin and defeated death in himself, rather than in the people who deserved punishment and had brought death on themselves. Moreover, he also removes the power of sin in their lives so that they ultimately may stop breaking fellowship with him and each other and may stop acting in such a way as to earn the penalty of sin (death). So God’s justice and righteousness are seen in that he restores people to unbroken relationship with him, removes from them not only their guilt but their brokenness and inevitable tendency toward sin.
If this is the righteousness that is granted to Christians in Christ, then it is more than (though not less than) a change in judicial state before God. Christians have forensic justification in Christ—they are declared “not guilty” in him—because they are united with him. Colossians 2:9–14 drives home this connection clearly: believers are filled in Christ, buried in death and raised to life with him in baptism. This new life and participation in Christ is then the grounds of God’s setting aside the legal demands that stood against the believer: they are nailed to the cross because Christ was nailed to the cross and the believer is in Christ. All trespasses are forgiven, because the believer is no longer operating under his own nature but is full of Christ, and in Christ the fullness of God dwells bodily.
So then to be justified, to be made right with God, is to have all of Christ’s righteousness as actually one’s own. It is not a legal fiction, but a spiritual reality. The believer is right with God; he may not always live in accord with this reality, but he is. By analogy: a husband is always married to his wife; even if he strays by cheating on her, he remains truly married to her.
This view of justification cuts off at its core any kind of works-righteousness view of righteousness. The righteousness that believers possess is always entirely God’s righteousness mediated to them by the Spirit through their participation in the resurrected Son. It is not, as in the Roman Catholic view, participatory righteousness in which the believer contributes his own righteousness (even if by faith and the Spirit’s power) and the remainder is accomplished by God. Nor is it that God chooses to see the believer as if he is righteous when in actuality he is not (yet) righteous because sanctification is incomplete. Rather, no part of the believer’s righteousness—right state, and not only right standing—is his own. Rather, it is always all of God. When acting righteously, one demonstrates that one is justified, but whoever is in Christ is already truly righteous.