The image of God is not fully defined in scripture, but Jesus Christ is the purest image of God.
God expresses his nature in a trinity of coequal, coeternal personss in Father, Son and Holy Spirit. God the Father and the Holy Spirit are divine in nature and are without flesh and bone, while God the Son in Jesus Christ has a dual nature of both divinity and humanity. Humanity is the highest in God's creation and created with the image or qualities of God in that we can exhibit his love, grace, mercy, peace and judgement to one another (within the scope of humanity). Christ left the divine and entered into humanity and gave us the perfect example of God's image imprinted upon humanity.
So for me to understand how we're created in God's image we must look to Christ first and examine how he lived his life.
Hebrews 1:1-3
1 Long ago God spoke many times and in many ways to our ancestors through the prophets. 2 And now in these final days, he has spoken to us through his Son. God promised everything to the Son as an inheritance, and through the Son he created the universe. 3 The Son radiates God’s own glory and expresses the very character of God, and he sustains everything by the mighty power of his command.