How to interpret the 'image of God'

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 “So what exactly is the ‘image of God’ in which man is created?”
This question, arising from the well-known creation text (Gen. 1:26f), has been debated and discussed literally for centuries.
A few have held that the “imago dei” is the actual human physical form. Most respected theologians do not give credence to this idea — not only because the idea that God has a physical form places severe limitations on God, but also because of the fundamental biblical teaching that God is invisible Spirit (Gen. 1:1-2; Gen. 6:3; Ex. 33:12-33; II Chr. 15:1; Isa. 11:2; Matt. 10:20; Jn. 1:18; 6:46; Rom. 8:9ff; I Cor. 2:10-13; 12:4-11; Eph. 4:4-6; Col. 1:15; I Tim. 6:15-16; I Jn. 4:12, 20).
Other interpretations regarding the image of God include the following: rationality; i.e., man’s self-awareness and ability to think coherently; language; i.e., man’s ability to express his thought, emotion and intentions; freedom; i.e., man’s free will and self-determination; the need and capacity for relationship; i.e., man’s ability to enter relationships with other humans freely and intentionally.
Each of these possibilities bears a measure of legitimacy. However, perhaps the most attractive interpretation is this: the image of God in man is man’s spirit. God is Spirit; therefore, His projected image is spiritual in nature.
The spiritual dimension of man is what sets him apart from the rest of creation. The creation narrative paints a vivid picture of God “breathing life” (spirit) into man (Gen. 2:7). Other “higher” animals may demonstrate some aspects of social, emotional, and intellectual characteristics. Only man is identified as “spiritual” (e.g., see Job 17:1; Ezek. 3:14 Ps. 51:10-11; Mt. 5:3; 27:50; Rom. 8:16).
The spirit of man that reflects (though imperfectly) the nature of God is the means by which man communes with God. Prayer, worship, inspiration, responding to God — all these are possible because man’s essential identity is spirit (Jn. 4:24; Phil. 3:3).