Hendriksen (New Testament Commentary on 1 Thessalonians 1:1) summarises the various shades of meaning of this great word:-

1. A quality or attribute of God or of the Lord Jesus Christ: his kindness. In this connection 2 Cor. 8:9 is often referred to: “For you know the grace of our Lord Jesus Christ.” (However, in connection with this passage, meaning (b) might also be considered.)
2. The favor toward his people which results from this kindness of disposition and which manifests itself a. in their deliverance from the guilt and punishment of sin, b. in the dynamic, transforming operation of the Holy Spirit in their hearts, and finally, c. in their entrance into glory. On God’s part, this favor is entirely sovereign and unconditional; on man’s part, it is completely unmerited. Cf. Eph. 2:8; “For by grace have you been saved through faith, and that not of yourselves; it is the gift of God.” Salvation by grace stands in opposition to salvation by the works of the law.
3. The state of salvation, the sum-total of the blessings of salvation, or, at times, any particular blessing or endowment, viewed (in each case) as the free gift of God. Cf. Rom. 5:2: “this grace wherein we stand.” Eph. 4:7: “But to each one of us was this grace given according to the measure of the gift of Christ.”
4. The gratitude which is the believer’s reaction when, led by the Spirit, he focusses his attention upon his own unworthiness and upon the greatness of God’s goodness toward him. Cf. 2 Cor. 2:14: “Thanks be to God …”

(Emphasis added)