Romeo does not want to fight Tybalt because he has just married Juliet, and even though he has to keep their marriage a secret, he now looks at Tybalt as his own family. Romeo ends up killing Tybalt after Tybalt kills Mercutio, Romeo's best friend. At the end of Act III, Scene 1, Romeo blames his love for Juliet, lamenting that he tried to make peace instead of killing Tybalt outright when Tybalt first insulted him.
"O sweet Juliet,
Thy beauty hath made me effeminate
And in my temper soft'ned valour's steel."
Tybalt's death results in Romeo's banishment. With Romeo fled to Mantua, Juliet is left to face her parents' concern. Believing her to be grief-stricken over Tybalt's death and in need of distraction, they arrange a hasty marriage to Paris—which Juliet then fakes her death to escape. On hearing the news, Romeo rushes to Juliet's tomb to kill himself. Juliet, waking to see Romeo dead, then kills herself. In short, by causing Romeo's banishment and separating the lovers, Tybalt's death precipitates the story's tragic conclusion.
Romeo won't fight Tybalt, at first, because he secretly married Juliet, Tybalt's cousin, that morning. Romeo now considers Tybalt to be a relation of his own, and he doesn't want to hurt anyone of Juliet's family now, despite the feud between his own parents and hers. When Tybalt approaches Romeo and calls him a "villain," claiming that Romeo has injured his family's honor (for crashing their party the night before), Romeo says, "Tybalt, the reason that I have to love thee / Doth much excuse the appertaining rage / To such a greeting" (3.1.33-35). In saying this, Romeo means that he has a reason to love Tybalt, though Tybalt doesn't know it yet, and this love is stronger than the anger he might feel at being addressed in such an insulting way. When Tybalt continues to berate him, Romeo says, "I do protest I never injured thee, / But love thee better than thou canst devise, / Till thou shalt know the reason of my love" (3.1.39-41). In other words, Romeo declares that he has not harmed Tybalt and actually loves him better than he can possibly understand right now. Romeo implores Tybalt to be satisfied with his words, but he is not.
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