What does the "image" of God mean?

What is Genesis 1:26 referring to? Are humans literally created in the image and likeness of God?

The Bible uses the word for image in many ways, including denoting a statue, an idol or a copy (Vine's Expository Dictionary of Biblical Words, 1985, "Statue"). Barnes' Notes says, "'Image' is a word taken from sensible things, and denotes likeness in outward form, while the material may be different" (notes on Genesis 1:26).

Likeness means "the original after which a thing is patterned" (Vine's, "Likeness"). "'Likeness' is a more general term [than image], indicating resemblance in any quality, external or internal" (ibid.).

The creation of all living creatures was introduced with the repeated phrase "according to its kind" (Genesis 1:21, 24-25). The introduction of man seems to break the pattern, as it does not say, "The earth will bring forth man according to his kind." However, the pattern isn't broken at all. Rather, in verse 26 God announced, "Let Us make man after Our image, according to Our likeness"—to resemble God.

Additionally, He endowed man with the ability to think, to create and to dominate the rest of creation. These are godlike qualities, superior to any other creature.

In its notes on Genesis 1:26, Matthew Henry's Commentary says, "Man was not made in the likeness of any creature that went before him, but in the likeness of his Creator; yet still between God and man there is an infinite distance" (emphasis added). True, there is an infinite difference between God's original creation making humans in His form and shape, with godlike abilities, and His incredible plan to make us of His substance, along with His holy, righteous character. Then the children of God, forever thankful and submissive to the eternal God, will be completely in the image and likeness of our Father (1 John 3:1-2).