Martin Luther's major contribution to theology was the idea of justification through faith alone. The Catholic Church's theology centered much more around the idea of justification (earning salvation) through works. It held that a person could earn salvation by participating in the proper church rituals, by doing good things, and even by paying money for indulgences. Luther believed that this could not be true. He argued that human beings were too sinful to ever be able to earn salvation through their own actions. They could only earn salvation by having faith in God.
This was not an idea that was completely new with Luther. However, he put it forward forcefully and at a time when it could really take root. It was the power of that idea that really drove the Protestant Reformation.
Martin Luther is responsible for creating the 95 Theses, which were a criticism of the Catholic Church. He is considered the father of Protestantism. Luther criticized the use of indulgences and the corruption in the Catholic Church at the time. Luther wanted to get back to the way the church was constructed in the time of Christ as seen in the New Testament. In keeping with the Renaissance values of the day, Luther got back to the "original sources," meaning the letters of St. Paul and the teaching of Christ. Luther encouraged Christians to read the Bible more for their own understanding of the Gospel. He stated that salvation was only possible through faith and not works such as giving to the Church in Rome.
Out of this Protestant Reformation, new denominations formed, such as Calvinists and Methodists. The creation of these sects of Christianity would not have been possible if not for Luther encouraging people to look inside Scripture for personal meaning. Luther's work also influenced the Catholic Church as well, as it reformed by training its monks and laypeople better.