In his book, Pilgrim Theology, Michael Horton describes the distinction between law and gospel.
“God’s Word has two parts — the law and the gospel — and there is a danger in either confusing or separating them. The law commands and the gospel gives. The law says, “Do,” and the gospel says, “Done!” Equally God’s Word, both are good, but God does different things through them.
In the widest sense, the law is everything in Scripture that commands, and the gospel is everything in Scripture that makes promises based solely on God’s grace to us in Christ. But in a narrower sense, the gospel is 1 Corinthians 15:3 – 4: “For I delivered to you as of first importance what I also received: that Christ died for our sins in accordance with the Scriptures, that he was buried, that he was raised on the third day in accordance with the Scriptures.” The content of the gospel is the announcement that Christ was crucified and raised for our salvation in fulfillment of the Scriptures. At the same time, the gospel includes God’s gracious fulfillment in Christ of all of the promises related to the new creation. That’s why Paul can answer his question, “Shall we then sin that grace may abound?” with more gospel: union with Christ in his death, burial, and resurrection, so that we’re no longer under sin’s dominion. The gospel isn’t just enough to justify the ungodly; it’s enough to… sanctify the ungodly. However, only because (in the narrower sense) the good news announces our justification are we for the first time free to embrace God as our Father rather than our Judge. We have been saved from the condemnation and tyranny of sin. Both are essential to the “glad tidings” that we proclaim.
We can also speak of the law and the gospel in the redemptive-historical sense, as the covenantal principle of inheritance. The history of salvation moves from promise to fulfillment, from shadows to reality. In this sense, the law is not opposed to the gospel. Yet when it comes to how we receive this gift — how redemption is applied to us by the Spirit — we are saved apart from the law. Law and gospel are completely opposed in this sense, since they are two different bases or principles of inheritance. We are saved by Christ or by our own obedience, but we cannot be saved by both. Interestingly, Paul includes both senses in Romans 3:21: “But now the righteousness of God has been manifested apart from the law [justification in the order of salvation], although the Law and the Prophets [i.e., the Old Testament writings] bear witness to it.”
Horton, Michael. “Pilgrim Theology.” Zondervan, 2011. iBooks