The verse you asked me to interpret is very familiar as it is so similar to Romans 8:29. 1 Peter 1:2, was written to those born again believers (v. 3) scattered in foreign lands (v. 1). They are the "Elect according to the foreknowledge of God the Father, through sanctification of the Spirit, unto obedience and sprinkling of the blood of Jesus Christ: Grace unto you, and peace, be multiplied." Romans 8:29 says, "For whom He did foreknow, He also did predestinate to be conformed to the image of His Son, that He might be the firstborn among many brethren." It is as though Peter was giving the details on what Paul revealed in Romans.
God, knowing the end from the beginning, "foreknew" four things: Jesus would be denied and crucified (Acts 2:23). Born again believers are destined to be like Jesus (Rom. 8:29). Israel is reserved and will one day be delivered (Rom. 11:2). And, He knew those who would denounce the world and receive Jesus as Lord and Savior, and He dedicated them by sanctifying them by the indwelling of the Holy Spirit (1 Pet. 1:1-3).
The verse should always be interpreted in its context. Here are verses two through nine of First Peter: 2 God the Father chose you long ago, and the Spirit has made you holy. As a result, you have obeyed Jesus Christ and are cleansed by His blood. May you have more and more of God's special favor and wonderful peace. 3 All honor to the God and Father of our Lord Jesus Christ, for it is by His boundless mercy that God has given us the privilege of being born again. Now we live with a wonderful expectation because Jesus Christ rose again from the dead. 4 For God has reserved a priceless inheritance for His children. It is kept in heaven for you, pure and undefiled, beyond the reach of change and decay. 5 And God, in His mighty power, will protect you until you receive this salvation, because you are trusting Him. It will be revealed on the last day for all to see. 6 So be truly glad! There is wonderful joy ahead, even though it is necessary for you to endure many trials for a while. 7 These trials are only to test your faith, to show (you and all who would accuse you) that it is strong and pure. It is being tested as fire tests and purifies gold -- and your faith is far more precious to God than mere gold. So if your faith remains strong after being tried by fiery trials, it will bring you much praise and glory and honor on the day when Jesus Christ is revealed to the whole world. 8 You love Him even though you have never seen Him. Though you do not see Him, you trust Him; and even now you are happy with a glorious, inexpressible joy. 9 Your reward for trusting Him will be the salvation of your souls. NLT
God planned, Jesus provided, and the Holy Spirit delivered those who believe in Him!