“Allah created Adam in his image,” means that He created him with all his attributes, whether blessed, knowledgeable, repentant, or accepted by Allah Most High.
The third approach is to understand that pronoun as referring to Allah Most High. This admits several interpretations.
First: “image” means “attribute,” as we have explained. The meaning would therefore be that Adam, peace be upon him, was distinguished from all other individuals and bodies by his understanding of rational concepts and his ability to devise crafts and industries. These are noble attributes that correspond in certain respects to the attributes of Allah Most High. On this interpretation, the Prophet’s statement, peace and blessings be upon him, “Allah created Adam in His image,” is valid.
If it is objected, “Sharing attributes of perfection entails sharing in divinity,” we reply: sharing certain remote concomitants, while differing in many other respects, does not entail equality in divinity. It is in this sense that Allah Most High said:
“And to Him belongs the highest attribute.” [al-Rūm 27]
And the Prophet, peace and blessings be upon him, said: “Cultivate the qualities of Allah.”