Mark, I hope that this excerpt from J. I. Packer’s book Hot Tub Religion will be helpful to you. This goes along well with what Steve posted.
What is sanctification? The root meaning of the word is relational, or as some say positional: to sanctify, or consecrate, is to set something or someone apart for God, either in general and inclusive terms or for some specific purpose, and to have it , or him, or her, accepted by God for the end that is in view. So, in the high-priestly prayer from which we have just quoted, Jesus says: “For them I sanctify myself, that they too may be truly sanctified” v. 19). Jesus’ self-sanctification was the specific setting of himself apart to be the sacrifice for his disciples’ sin; their sanctification, and ours, was the inclusive setting of ourselves apart to be God’s holy people in every aspect, department, activity, and relationship in our lives. But whereas Jesus’ self-sanctification is his own act, he speaks of our sanctification as a work of God upon us and in us. This points us to the further truth that when God sets fallen human beings like ourselves apart for himself, to be his servants and worshipers and to live in fellowship with him, his action is transformational in its character and effects. Why so? Because those whom God sets apart for himself must be Godlike, and if they are not already so they must be made so. Accordingly, we find that while some New Testament passages speak of God’s sanctification of us in the past tense, as an event, a milestone, something already done (Acts 26:18; Heb. 10:10, 14, 29), others speak of it as something present and future (1 Thess. 4:3-4; 5:23), in other words as a process that goes on. The former texts refer to the relational aspect of sanctification, which becomes real upon our believing as do justification and adoption, and is momentary. The latter texts refer to the transformational process that is lifelong and that is spoken of elsewhere as growth in grace, growing up into Christ, and being changed from glory to glory by the Holy Spirit (2 Peter 3:18; Eph 4:15; 2 Cor. 3:18; cf. Rom. 12:2). It is to this progressive sanctification that the word sanctification regularly refers in Christian theology… pp. 164-165
In Keep in Step with the Spirit I argue in detail for my view. In that book I also affirm or imply the following points:
1.The context of sanctification is justification by faith through Christ. The sanctified are justified sinners, saved by grace and living every day only by being forgiven by God.
2. The basis of sanctification is union with Christi in his death and resurrection. The holy life is the Christ-life in us, not the fruit of any natural potential or resources that we have for godly living.
3. The agent of sanctification is the Holy Spirit, who enables us habitually to and actively to will and work for God’s pleasure and for his praise. It is we who work — there is no psychological passivity here, but rather intense moral effort on our part; — yet we work, not self-reliantly, but in dependence on Christ and in expectation of help from the Spirit. By leading us to form the habits of holiness the Spirit changes us into Christ’s moral likeness.
4. The form that sanctification takes is conflict with the indwelling sin that constantly assaults us. The conflict, which is lifelong, involves both resistance to sin’s assaults and the counterattack of mortification, whereby we seek to drain the life out of this troublesome enemy.
5. The rule of our holiness is God’s law. The heart of our holiness is the love of our heart in gratitude and goodwill toward God, and toward others for his sake. The expression of our holiness is our Jesus-likeness, that is, our manifesting the fruit of the Spirit (Gal. 5:22-24), which is the moral and spiritual profile of Jesus in his disciples. pp. 172,173
