Lutherans believe that baptism can be done by immersion of the new believer in water or by sprinkling or pouring water over the new believer’s head. Many other denominations insist that the method must be immersion because in the Greek of the ancient world the word “baptize” (baptizo) meant “dip,” “immerse,” or “submerge” (The New International Dictionary of New Testament Theology, vol. 1, p. 144, Colin Brown, ed., Zondervan Publishing House, Grand Rapids, Michigan, 1986). Lutherans say that fact does not bind us to the method of literally immersing the believer. Here is why:

The Bible shows us that baptism is the way believers in Christ are washed from sin (Acts 22:16) and united with Christ in his burial and resurrection (Col. 2:10-14). It is the means revealed in Scripture by which the benefits of Christ’s sacrifice on the cross are applied to us by God in a symbolic, inward, and spiritual way through a faith worked in us by the Holy Spirit—it is not meant to be a literal, outer, physical washing or burial:

For Christ also suffered once for sins, the righteous for the unrighteous, that he might bring us to God, being put to death in the flesh but made alive in the spirit, in which he went and proclaimed to the spirits in prison, because they formerly did not obey, when God’s patience waited in the days of Noah, while the ark was being prepared, in which a few, that is, eight persons, were brought safely through water. Baptism, which corresponds to this, now saves you, not as a removal of dirt from the body but as an appeal to God for a good conscience, through the resurrection of Jesus Christ, who has gone into heaven and is at the right hand of God, with angels, authorities, and powers having been subjected to him.
(1 Peter 3:18-22 ESV)

Also note here that the ark is said to be a type of baptism because of the water through which Noah and his family were saved; but they were not immersed in the water—they floated on top of it—and yet were saved. A use of water by God to save people from perishing is said to be a type of baptism. This shows us that the important outer, physical element in baptism is water, which throughout Scripture symbolizes the Holy Spirit, not the method by which the water is applied. Cleansing from sin is also symbolized in other ways in the Scriptures:

And Moses took half of the blood, and put it in basons; and half of the blood he sprinkled on the altar. And he took the book of the covenant, and read in the audience of the people: and they said, All that the LORD hath said will we do, and be obedient.

And Moses took the blood, and sprinkled it on the people, and said, Behold the blood of the covenant, which the LORD hath made with you concerning all these words.
(Exodus 24:6-8 KJV)

Compare this with Hebrews 10:22:

Let us draw near with a true heart in full assurance of faith, having our hearts sprinkled from an evil conscience, and our bodies washed with pure water. (KJV)

Note also in this regard these interesting prophecies:

Then will I sprinkle clean water upon you, and ye shall be clean: from all your filthiness, and from all your idols, will I cleanse you. A new heart also will I give you, and a new spirit will I put within you: and I will take away the stony heart out of your flesh, and I will give you an heart of flesh. And I will put my spirit within you, and cause you to walk in my statutes, and ye shall keep my judgments, and do them.
(Ezekiel 36:25-27 KJV):

Behold, my servant shall deal prudently, he shall be exalted and extolled, and be very high. As many were astonied at thee; his visage was so marred more than any man, and his form more than the sons of men: So shall he sprinkle many nations; the kings shall shut their mouths at him: for that which had not been told them shall they see; and that which they had not heard shall they consider.
(Isaiah 52:13-15 KJV)

So sprinkling has just as much Biblical symbolism behind it as does immersion.

As for pouring, note Titus 3:5-6:

But after that the kindness and love of God our Saviour toward man appeared, not by works of righteousness which we have done, but according to his mercy he saved us, by the washing of regeneration, and renewing of the Holy Ghost; which he shed (literally, “poured out”) on us abundantly through Jesus Christ our Saviour. (KJV)

On top of these Scriptural reasons we have a source written in Greek that dates to the generation after the apostles, perhaps earlier, which shows that the Christian rite of baptism was not limited to the method of immersion by the use of that name for it. The Didache, dated perhaps as early as A.D. 65 but no later than A.D. 120, says this:

Now about baptism, baptize this way: after first uttering all of these things, baptize “into the name of the Father and of the son and of the holy Spirit” in running water. But if you do not have running water, baptize in other water. Now if you are not able to do so in cold water, do it in warm water. Now if you don’t have either, pour water three times on the head, “into the name of the Father, and of the son, and of the holy Spirit.” Now before the ritual cleansing, the baptizer and the one being baptized should fast, and any others who are able. Now you will give word for the one who is being baptized to fast for one or two days beforehand.
(The Didache, chapter 7, verses 1-4)

The point is not that the Didache’s teaching is truly apostolic—it isn’t; the point is linguistic and historical: it shows how the Greek words baptizo (the verb) and baptisma (the noun) were used in a work in the same language and circulated in the same culture as the apostles among people who had sat under their teaching, or whose parents had. The document in fact purports to be written by the apostles—it was also called “The Teaching of the Twelve” (the Greek word didache is related to “doctrine,” “didactic,” etc.). Whoever wrote it wanted Greek-speaking Christians to think that it was written by the apostles. If the Greek word baptizo could mean only “to immerse,” and if Greek-speaking Christians who had sat under the teaching of the apostles knew that any other use was a blatant violation of not only what baptism was supposed to be, but also of the Greek language itself, then the above passage would have revealed the authors to be frauds—ignorant of the meaning of their own language. The fact that the authors could write of baptism in this way shows that in Greek the words baptizo and baptisma, when used of the Christian rite of baptism, were not restricted to cases of literal immersion but could also refer to other methods.