While people often pose this question, the Bible does not teach that it is an either/or proposition. A person is saved by the grace of God when that person meets the conditions of His grace. One of those conditions happens to be baptism in water for the remission of sins. But a lot of people today do not want to meet God*s conditions. Some want to deny that God has even given any such conditions. If He hasn*t, then everyone would be saved. God has given us the freedom to choose to be saved or lost. Those saved will be saved by grace for no one can earn their salvation. But God*s grace will not overlook the command I will not obey.
Titus is a good book to turn to in response to this question. “For the grace of God that bringeth salvation hath appeared to all men” (Tit. 2:11). God’s grace is His doing for us that which we did not deserve and which we could not do ourselves. God so desired our salvation that He gave us what we needed, but could never deserve…a savior. But not all will be saved for grace has to be appropriated by man through the conditions revealed by God. “For by grace are ye saved through faith; and that not of yourselves: it is the gift of God: Not of works, lest any man should boast” (Eph. 2:8-9). What God does for us is a matter of grace: the death of Christ, His blood, and His gospel. What we do in response to His grace is by faith. That is our part. Too many want to claim the grace of God without the response of faith, but it cannot be done. “Therefore being justified by faith, we have peace with God through our Lord Jesus Christ: By whom also we have access by faith into this grace wherein we stand, and rejoice in hope of the glory of God” (Rom. 5:1-2).
Now look at Titus 3:5, “Not by works of righteousness which we have done, but according to his mercy he saved us, by the washing of regeneration, and renewing of the Holy Ghost.” We are not saved by works of righteousness but according to the mercy of God. Does this mean we are saved by the mercy of God and not without any conditions at all? Not at all! Paul says God saved us by the washing of regeneration. The washing of regeneration is baptism in water. Notice that by this we are saved. We are saved by the washing of regeneration. God saves us when we meet His conditions of salvation. The phrase “wash away thy sins” was used by Ananias in Acts 22:16 in his conversation with Paul. In both phrases, the word “wash” is used showing the connection of water with the removal of sins. It is the blood that washes away our sins spiritually when we are baptized in water for their remission (Acts 2:38). It is only after this “washing of regeneration” that Paul can speak of us as “having been justified” and heirs of the hope of eternal life (v7)
Some people have been taught error on baptism so long that they have come to classify baptism as a work of righteousness and contend that we are not saved by such works (Eph. 2:8,9). But note here that the washing of regeneration is NOT a work of human merit. It is contrasted with such. Thus, baptism stands in contrast to works of human merit and is excluded from them. The two are not in the same category. Baptism is not a meritorious act of human effort. It is the final condition in God’s plan for saving man which includes faith (Jn. 8:24), repentance (Lk. 13:3), and confession (Rom. 10:10). It is the means by which God cleanses the alien sinner from sin (Acts 22:16). While the blood of Christ is the cleansing agent, baptism in water is the place in which this operation of God occurs. “Buried with him in baptism, wherein also ye are risen with him through the faith of the operation of God, who hath raised him from the dead” (Col. 2:12).
— Mike McDaniel