Peter began here by reminding the “strangers” of the place that Jesus Christ has. Jesus Christ is a living stone. A dead Saviour is no Saviour at all. When the nation of Israel went to war, they tried to protect their king to make sure he was not killed in battle. King Saul was killed in battle and the nation went home defeated. King David was a good warrior; however, when he was older, he grew weary in battle and the enemy was about to kill him but some of his men saw what was happening and they killed the enemy and protected king David. From then on, they would not let him go to war anymore.
Christianity is the only “religion” that has a living Saviour. All other religions have a dead saviour. A dead saviour cannot save anyone. The Catholics claim to have Jesus Christ as their Saviour but they teach that Mary is necessary for salvation. Mary is dead and buried.
Peter was speaking to those who were truly born again and they were coming to a living stone. Jesus Christ is the Rock upon which true saints must build their lives. Jesus used the illustration of the rock in Matthew 7:24-25. The person who builds upon Jesus Christ can weather the storms of life. The apostle Paul pointed out that Jesus Christ is the Rock from which the nation of Israel drank while wandering in the wilderness:

I Corinthians 10:4 And did all drink the same spiritual drink: for they drank of that spiritual Rock that followed them: and that Rock was Christ.

Peter further stated that this living stone, Jesus Christ, was disallowed of men, but chosen of God, and precious. The corner stone was the most important stone in the construction of a building in Bible times. The Jews of Peter’s day were familiar with the account of how the builders had rejected the corner stone sent to them as they were building the Temple in the Old Testament. The builders rejected the stone and set it aside. When it came time to place the corner stone, they sent to the men at the quarry requesting the corner stone. They were advised that the corner stone had already been sent and it was found laying off to the side. Peter used that illustration to speak of how Jesus Christ was also rejected by the religious leaders of His day. They not only cast Him aside, but they had Him crucified, and they rejoiced when He was dead. They were shocked when He rose again. They did not accept that fact and made up a lie about it. However, He is the living stone that is chosen of God and precious. He is the Saviour of mankind. One day the Jewish nation will accept Him as their Messiah and King.
In verse 5 Peter stated that the saints were also lively stones. They were built up a spiritual house. Christians are given eternal life at the moment of salvation. Ephesians 2:1 states:

Ephesians 2:1 And you hath he quickened, who were dead in trespasses and sins;

The word “quickened” means to be made alive. Those who are saved have been given life. The lost are spiritually dead.

Ephesians 2:19 Now therefore ye are no more strangers and foreigners, but fellowcitizens with the saints, and of the household of God;
20 And are built upon the foundation of the apostles and prophets, Jesus Christ himself being the chief corner stone;
21 In whom all the building fitly framed together groweth unto an holy temple in the Lord:
22 In whom ye also are builded together for an habitation of God through the Spirit.

True born again Christians are God’s workmanship. We are bought with a price. We cannot make anything good of ourselves. However, if and when we are saved, it is God through Jesus Christ Who makes something good of us.
Peter stated further that those who are saved are “an holy priesthood”. We have already noted from chapter 1 that the saints are commanded to be holy, as God is holy. Here we are reminded that true saints are a holy priesthood. The purpose of this priesthood is to offer up spiritual sacrifices. We do not need to bring bulls and goats. We are to be spiritual sacrifices. Romans 12:1-2 states:

Romans 12:1 I beseech you therefore, brethren, by the mercies of God, that ye present your bodies a living sacrifice, holy, acceptable unto God, which is your reasonable service.
2 And be not conformed to this world: but be ye transformed by the renewing of your mind, that ye may prove what is that good, and acceptable, and perfect, will of God.

True saints have been bought with a price. True saints do not belong to themselves. They have submitted themselves to God in salvation and are under His authority. True saints do not do what pleases the flesh. They need to do that which pleases their heavenly Father.
Peter stated that we need to offer up spiritual sacrifices, acceptable to God by Jesus Christ. We cannot offer up acceptable sacrifices to God unless we are saved. Many lost people talk about the things they do for charity. They assume that the “good” things they do will outweigh the bad things they do. The Bible tells us that we cannot do anything good without Christ.

Romans 7:18 For I know that in me (that is, in my flesh,) dwelleth no good thing: for to will is present with me; but how to perform that which is good I find not.