The phrase "Grace of God" is most often interpreted to mean God's unmerited favor, particularly in the New Testament. By the grace of God, humans are given the gift of salvation, not through any action on their own part.
The word most commonly translated as "grace" in the New Testament is the Greek word "charis," which can have several meanings, including "favor" or "good will." New Testament writers, St. Paul in particular, believed that man could not earn salvation through his own actions, "For all have sinned, and come short of the glory of God." However, despite man's inherent sinfulness, he is redeemed by God's grace and given the gift of eternal life. The phrase "there but for the grace of God" is sometimes used without any literal religious connotations to make the point that misfortune can occur to anyone, and that those who have avoided a particular downfall should be grateful and contrite.