"Do not judge so that you will not be judged. "For in the way you judge, you will be judged; and by your standard of measure, it will be measured to you. (Matthew 7:1-2 NASB)
This may be the most misunderstood passage in all of scripture. Your typical unbeliever will whip this one out anytime it appears that a Christian is in disagreement with their lifestyle or values. The liberal will often use this passage as a means to overlook sin for the sake of unity, and will classify any discipline based on sin, or any standard set against sinfulness to be in violation of Matthew 7:1-2. At the same time many fundamentalists will skip ahead to the end of this chapter and read 'you will know them by their fruit' and use that to completely write this verse off. This verse is used wrongly to paralyze biblical discernment by one group, and at the same time it is rendered meaningless by another. Both groups are wrong.
When teaching this verse to youth I always fast forward to the book of Revelation, specifically Revelation 20:12. In this passage you see into the future, and there before John is all the dead lined up before a throne, ALL the dead includes you, and it includes me. Then books are opened then the dead are judged by what is written in those books according to their deeds. Who are they judged by... the One who sits on the throne, the one from whom heaven and earth flee His presence. Now, in light of the fact that you too will stand before the throne of the most high God and be judged according to your deeds, by what standard do you want to be judged? "For in the way you judge, you will be judged; and by your standard of measure, it will be measured to you." This is very important to realize, be ready to answer to God by the very standard you apply to others. I always tell people, if you call a man a fool because He doesn't speak well, like say President Bush, you better be ready to stand before the Judgment Seat and be judged based on your speaking ability. Or if you say President Obama is a fool because He knows nothing about healthcare, be ready to stand judgment based on your knowledge of healthcare. Now be careful not to get too carried away here. You can believe that we should have someone who speaks better in the whitehouse, and you can disagree with a man's views on healthcare, but when you make character judgments based on those stances you are treading in treacherous waters.
Another thing to realize is that Matthew 7:1-2 moves us out of the teaching on worry and introduces what will be the remainder of the Sermon on the Mount. It is important to see the introductory nature of these verses. The rest of this chapter will be focused discernment, both discernment of oneself, and discernment of others. This introductory verse lays out the foundation upon which all discernment must take place, and that is on a foundation of self-examination, and self judgment. It is so important, especially considering the difficulty of the teachings that are to follow this, especially near the end of the chapter, that the foundation be laid. You cannot go out and preach the end of Matthew 7 before applying to yourself the beginning of Matthew 7.
Now a quick word about being labeled judgmental and then we will move on. How do you react when someone accuses you of being judgmental? The majority of people get angry, or dismissive, or self righteous, or even worse. The reality is that whenever anyone accuses you of sin, whether they are a believer or an unbeliever, whether it seems so far out there and just wrong or not, the first thing you must ask yourself is this: "Is it true?" If someone tells you that you are judgmental, it may very well be God using a person to rebuke and chasten you, so be very careful not to just write them off. Now it is also important to recognize that Satan in an accuser, and you will be false accused of all sorts of things as a Christian so you cannot take every insult as though it is a rebuke from God. You must be in the word and in prayer, and you must be ready to discern these matters and examine yourselves. Jesus always acted under control and was hasty about nothing. We too ought to be under control examining ourselves, judging ourselves first, and waiting until we know the proper course of action before we react.