John Murray is helpful when he writes about this important distinction.
Regeneration is an act of God in us; justification is a judgment of God with respect to us. The distinction is like that of the distinction between the act of a surgeon and the act of a judge. The surgeon, when he removes an inward cancer, does something in us. That is not what a judge does – he gives a verdict regarding our judicial status. If we are innocent he declares accordingly.
The purity of the gospel is bound up with the recognition of this distinction. If justification is confused with regeneration or sanctification, then the door is opened for the perversion of the gospel at its center. Justification is still the article of the standing or falling of the Church.
The truth is we need both. We need the Holy Spirit to invade our hearts and make us alive. We need God to remove the veil from our eyes so that we can see the beauty and glory of God in the face of Jesus Christ (2 Cor 4:3-6).
But, we also need God to declare us righteous, not on the basis of our merit but in respect to the merit of Christ. And this is the good news of the gospel.
God’s justice has been satisfied by the person and work of Jesus and as believers in Christ we stand in Him by faith to receive the gifts of God’s grace and the absolute assurance that we have right-standing with God.
To be justified is not merely a legal fiction it is a declaration of God himself that those who believe in Christ are forgiven of sin; it is a declaration that righteousness has been achieved by Christ and applied to the sinners account through imputation, and this imputed righteousness is perfect, complete, lacking in nothing. And for all those who believe we can read Romans 8 with confidence saying…
Who shall bring any charge against God’s elect? It is God who justifies. 34 Who is to condemn? Christ Jesus is the one who died – more than that, who was raised – who is at the right hand of God, who indeed is interceding for us. —Romans 8:33-34
 John Murray Redemption Accomplished and Applied.