"Behold! the angel said: 'God has chosen you and purified you and has chosen you above the women of all nations. O Mary! God gives you the good news of a word from Him, whose name shall be Messiah, Jesus son of Mary, honored in this world and the hereafter, and one of those brought near to God" (3:42).

Islam regards its teachings to be a re-affirmation and culmination of the teachings of previous monotheistic religions like Judaism and Christianity. Hence, all Muslims believe in Moses and Jesus as Prophets of God. Prophet Muhammad was commanded to recite in the Qur'an:

"Say, we believe in God and that which was revealed unto us, and that which was revealed unto Abraham and Ishmael and Isaac and Jacob, and the tribes and that which was entrusted unto Moses and Jesus and the Prophets from their Lord We make no distinction between any of them and unto Him we have submitted" (3:84).

A Muslim never refers to him simply as "Jesus", but always adds the phrase "upon him be peace." The Qur'an confirms his virgin birth, and an entire surah (chapter) of the Qur'an is entitled "Mary." The Qur'an describes the Annunciation as follows:

"She said: 'O my Lord! How shall I have a son when no man has touched me?' He said: 'Even so; God creates what He wills. When He decrees a thing, He says to it, "Be!" and it is.'" (Qur'an 3:42-7)

Jesus was born miraculously through the same power that had brought Adam into being without a father: "Truly the likeness of Jesus with God is as the likeness of Adam. He created him of dust and then said to him, 'Be!' and he was." (Qur'an 3:59)

During his prophetic mission, Jesus performed many miracles. The Qur'an tells us that he said: "I have come to you with a sign from your Lord: I make for you out of clay, as it were, a figure of a bird, and breathe into it and it becomes a bird by God's leave. And I heal the blind, and the lepers, and I raise the dead by God's leave." (Qur'an 3:49)

Neither Muhammad nor Jesus came to change the basic doctrine of the belief in One God, brought by earlier prophets, but to confirm and renew it. In the Qur'an, Jesus is reported as saying that he came: "To attest the law which was before me. And to make lawful to you part of what was forbidden to you; I have come to you with a sign from your Lord, so fear God and obey me." (Qur'an 3:50)

Source: www.islamic-city.com/JesusInIslam/Jesus.htm