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Simply put, covenant theology is the basic understanding of the whole Bible story and a description of the way in which God relates to His creation and humanity.

For example, when Paul describes the sinfulness of man in Romans 1, he describes him as a covenant breaker. This implies that from the very beginning of creation, the relationship between God and man has been a covenant one in which God commits Himself to be Himself to man. He gives certain promises to man. Because of those promises, because of the character of God, God calls man to respond to Him in faith and obedience.

When you grasp the covenant principle, you see a couple of things. One is that all the way through the Bible, there runs a theme of the two ways. You find it, for example, at the beginning of the Psalms. There are two ways for men and women to respond to God: the way of the righteous and the way of the unrighteous; the way of faith and the way of disobedience. In the Gospels, Jesus says there are two ways: the way of faith and the way of disobedience. Although the word covenant is not always used, it’s the undergirding principle of the whole, the reality that explains everything.

In the first relationship between God and man, God promised much to Adam, but Adam and Eve rebelled against Him and broke the covenant. God, therefore, made new promises to restore fallen humanity. The story of the Bible from that point onward is simply a story about a series of covenants that God makes with His people, and they all belong to the same theme: fulfilling the covenant promise of Genesis 3:15.

Each covenant shows more and more about how God’s covenant promise in Genesis 3:15 would be fulfilled. For example, when God made the covenant with Abraham, Abraham knew that in his seed, somewhere in his line, someone would come in whom all the nations would be blessed, but he didn’t know much more about how it was going to happen. In Moses’ day, Moses learned that the One who would fulfill the covenant would be a prophet. He was given regulations that functioned as pictures of how God’s promise would be fulfilled. When David’s covenant was made, David learned that one of his descendants would be the fulfillment of the promise. When Isaiah prophesied about the Suffering Servant, when Daniel had his vision of the Son of Man, all of it was building up the picture of how the covenant would be fulfilled.

In the New Testament, on the evening before Jesus’ crucifixion, He summarized His own ministry by saying to the eleven disciples who were faithful to Him, “This is the blood of the covenant” (Matt. 26:28). This was a fulfillment of the Old Testament prophecy that God would make a new covenant. Jesus spoke about the shedding of His blood as the way in which the new covenant would be brought to fruition.

When we come to trust in Jesus, we know Jesus as our covenant Lord and Savior. We are called, therefore, to respond to Him in faith and obedience. In Revelation 21, we see how this is all fulfilled in the way in which God, right at the end, says, “I will be a father to you, and you will be my son,” which is what Adam was created to be at the beginning.

Covenant is not the only thing in the storyline of the Bible, but it is the undergirding structure that unites the whole and makes sense of it. It also enables us to see how Old Testament believers were saved and justified in the same way New Testament believers are saved and justified, although they didn’t have the fullness of God’s revelation as we do. This is why covenant theology is such an important insight for understanding the Scriptures.

This transcript is from an Ask Ligonier Podcast session with Sinclair Ferguson and has been lightly edited for readability. To ask Ligonier a biblical or theological question, email ask@ligonier.org or message us on Facebook or Twitter.