The classic passage from the Biblical text that answers this question is John 3:1-21. The Lord Jesus the Christ is talking to Nicodemus, a prominent Pharisee and member of the Sanhedrin (the ruling body of the Jews). Nicodemus had come to Jesus at night with some questions.
“Jesus answered and said unto him, Verily, verily, I say unto thee, Except a man be born again, he cannot see the kingdom of God. Nicodemus saith unto him, How can a man be born when he is old? can he enter the second time into his mother's womb, and be born? Jesus answered, Verily, verily, I say unto thee, Except a man be born of water and of the Spirit, he cannot enter into the kingdom of God. That which is born of the flesh is flesh; and that which is born of the Spirit is spirit.” John 3:3–6
The phrase "born again" literally means "born from above." Nicodemus had a real need. He needed a change of his heart—a spiritual transformation. New birth, being born again, is an act of God whereby eternal life is imparted to the person who believe (2 Corinthians 5:17; Titus 3:5; 1 Peter 1:3; 1 John 2:29; 3:9; 4:7; 5:1-4, 18). John 1:12, 13 indicates that being "born again" also carries the idea of "becoming children of God" through trust in the name of Jesus the Christ.
Why does a person need to be born again? “And you hath he quickened, who were dead in trespasses and sins;” Ephesians 2:1
To the Romans he wrote, "For all have sinned, and come short of the glory of God;" Romans 3:23.
From the fall of Adams sin and the expulsion from the Garden of Eden, all people are born into Sin and are spiritually “dead”; when they receive spiritual life through faith in Christ, the Biblical account likens it to a rebirth. Only those who are born again have their sins forgiven and have a relationship with God.
How does that come to be? "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." Ephesians 2:8-9
When one is saved, they have been born again, spiritually renewed, and is now a child of God by right of new birth. Trusting in Jesus the Christ, the One who paid the penalty of sin when He died on the cross, is the means to be "born again.”
"Therefore if any man be in Christ, he is a new creature: old things are passed away; behold, all things are become new." 2 Corinthians 5:17
Jesus uses the phrase “born of water” in answer to Nicodemus’s question about how to enter the kingdom of heaven. He told Nicodemus that he “must be born again” (John 3:3). Nicodemus questioned how such a thing could happen when he was a grown man.
“Jesus answered, Verily, verily, I say unto thee, Except a man be born of water and of the Spirit, he cannot enter into the kingdom of God." John 3:5
Being “born of the Spirit” is easily interpreted—salvation involves a new life that only the Holy Spirit can produce (2 Corinthians 3:6). But there are a couple different schools of thought on what Jesus meant when He said, “born of water.” One perspective is that “born of water” refers to physical birth. Unborn babies float in a sack of amniotic fluid for nine months. When the time for birth arrives, that sack of water bursts, and the baby is born in a rush of water, entering the world as a new creature.
This birth parallels being “born of the Spirit,” as a similar new birth occurs within our hearts (2 Corinthians 5:17). A person once-born has physical life; a person twice-born has eternal life (John 3:15–18, 36; 17:3; 1 Peter 1:23). Just as a baby contributes no effort to the birth process—the work is done by the mother—so it is with spiritual birth. We are merely the recipients of God’s grace as He gives us new birth through His Spirit (Ephesians 2:8–9). According to this view, Jesus was using a teaching technique He often employed by comparing a spiritual truth with a physical reality. Nicodemus did not understand spiritual birth, but he could understand physical birth so that was where Jesus took him.
The other perspective is that “born of water” refers to spiritual cleansing and that Nicodemus would have naturally understood it that way. According to this view, “born of water” and “born of the Spirit” are different ways of saying the same thing, once metaphorically and once literally. Jesus’ words “born of water and the Spirit” describe different aspects of the same spiritual birth, or of what it means to be “born again.” When Jesus told Nicodemus that he must “be born of water,” He was referring to his need for spiritual cleansing.
Throughout the Old Testament, water is used figuratively of spiritual cleansing. For example, “Then will I sprinkle clean water upon you, and ye shall be clean: from all your filthiness, and from all your idols, will I cleanse you.” Ezekiel 36:25 (see also Numbers 19:17–19; and Psalm 51:2, 7). Nicodemus, was a teacher of the law, he would surely have been familiar with the concept of physical water representing spiritual purification.
The New Testament, too, uses water as a figure of the new birth. Regeneration is called a “washing” brought about by the Holy Spirit through the Word of God at the moment of salvation (Titus 3:5; cf. Ephesians 5:26; John 13:10). Christians are “washed . . . sanctified . . . justified in the name of the Lord Jesus Christ and by the Spirit of God” (1 Corinthians 6:11). The “washing” Paul speaks of here is a spiritual one.
Whichever perspective, one thing is certain: “born of water” is not a reference to water baptism.
Baptism is nowhere mentioned in the context, nor did Jesus ever imply that we must do anything to inherit eternal life but trust in Him in faith (John 3:16). Water baptism is an outward sign that we have given our lives to Jesus, but not a requirement for salvation (Luke 23:40–43).
The sacrosanct to this point is seen in Jesus telling the thief that he would be with Jesus in paradise…the thief had not been baptized.
“And he said unto Jesus, Lord, remember me when thou comest into thy kingdom. And Jesus said unto him, Verily I say unto thee, Today shalt thou be with me in paradise.” Luke 23:42–43