Martin Luther is credited with almost single-handedly inaugurating the Protestant Reformation, although Renaissance humanists also had a role. Luther raised many valid objections to the Catholicism of his time, and many of his concerns were addressed at the Council of Trent, and later at Vatican II.
Luther started out as a Catholic Augustinian canon, until he began to have doubts about certain Catholic Teachings, including the Catholic doctrine of justification. Luther was a strong advocate in justification by faith alone. He argued that God imputes righteousness, and that Christians are both sinners and saints at the same time. He also took issue with other Church teachings, including indulgences, and posted his 95 Theses, or 95 points for debate, to the door of the church of All Saints in Wittenberg, Germany.
Luther was excommunicated from the Catholic Church on June 15, 1520, as his views became more and more opposed to official Church Teaching. Luther had no intention of starting his own church, but gradually this happened. While Luther began the Reformation, he believed other reformers went to far. As such, Luther believed in Christ’s Presence in the bread and wine, baptismal regeneration, auricular confession, and held the Virgin Mary in high regard. The Lutheran liturgy retained many Catholic elements. Despite being opposed to Catholic Teaching, Luther saved much of his passion for fellow Protestants, especially Ulrich Zwingli, whose denial of the Real Presence got Luther in an uproar.
Today Lutheranism is divided into different groups. In the United States, there are 3 major Lutheran synods: Evangelical Lutheran Church in America (ELCA), The Lutheran Church Missouri Synod (LCMS), and The Lutheran Church, Wisconsin Synod, although there are other minor ones. The ELCA tends to be the most progressive, and is involved in ecumenical dialogue, even signing an agreement with the Catholic Church stating that we essentially agree on justification. In addition, they ordain women ministers, have a communion-sharing agreement with the Episcopal church, and are discussing the possibility of openly gay clergy. The LCMS and LCWS remain staunchly conservative, and many people in these synods even refuse to pray together with other Lutherans.
Overview: The Lutheran Church
Numbers - 64,000,000 worldwide (see Adherents.com)
Date founded: AD 1517
Major Figures - Martin Luther, Philip Melancthon, Philipp Jakob Spener, Dietrich Bonhoeffer.
Valid Apostolic Succession - No. Lutherans tend to view Apostolic Succession as teaching what the Apostles taught, as opposed to a visible line of succession. However, Swedish Lutherans have retained a line of succession. Some Lutheran bishops may have valid Apostolic Succession, because of consecration by Anglican bishops, some of whom from a Catholic standpoint have valid lines.
# of Sacraments - 2; Baptism and the Lord’s Supper. Although Luther found Confession valuable and did not discontinue the practice, he did not view it as a sacrament.
View of Eucharist - Luther taught what has traditionally been called consubstantiation or impanation. Whereas the Catholic Church teaches that the bread and wine become the body and blood of Christ in substance (and the physical characteristics of bread and wine remain), Luther taught that the bread and wine and body and blood of Christ are mingled, so that the substance of each remains. This is why Lutherans do not adore the Eucharistic host because they would be adoring bread with the body of Christ.
Ordination standards - married and celibate men and women in many Lutheran bodies. Celibate and married men traditionally, and in many synods.
Views on Mary - often varies; Some Lutherans come close to the full Catholic understanding of Mary, although the majority probably do not. Luther himself believed that Mary was the Mother of God, ever-virgin, and had deep respect for Mary. However, Luther had issues with Marian devotion taken too far as to exclude Christ.
Major Moral Stands - Different Lutheran synods have differing understandings of morality. The ELCA tends to mirror the positions of other mainline Protestant denominations, taking more progressive positions, while the LCMS and the Wisconsin Synods uphold more traditional morality.
Major Parties/Divisions - The Lutheran Church consists of various synods, each holding differing views. The ELCA is the most progressive liturgically, theologically, and morally. The LCMS and Wisconsin Synods are more conservative in these areas and follow the original teachings of Luther and his followers more strictly.
Major Prayers/Devotions - Lutherans theoretically share some devotions with Catholics and Anglicans, including the Liturgy of the Hours, which as Derek points out, is not a common practice. Reading the Bible is emphasized to a large degree. A few I know pray the rosary, but this is in no way mainstream, and many Lutherans consider praying the rosary a bad practice.
Note: To all Lutherans reading this, if there are important things I omitted, or errors, please let me know.
Image from: http://www.historyguide.org/images/luther.jpg