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Luke 17:20-21

(20) And when he was demanded of the Pharisees, when the kingdom of God should come, he answered them and said, The kingdom of God cometh not with observation: (21) Neither shall they say, Lo here! or, lo there! for, behold, the kingdom of God is within you.
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It is evident that the Pharisees' conception of the Kingdom of God differs from that of Jesus. They believed in a spectacular, visible establishment of the Kingdom, even as we look forward to its fulfillment in the near future. However, in Luke 10:9, 11 and again in Luke 11:20, Jesus plainly says that it was already present, whether in the persons of the apostles or Himself, as exhibited in their acts. Acts can include miracles, conduct, and their messages. His statement in Luke 17:20-21 explains that they should not expect a visible manifestation of the Kingdom as they perceived it at that time.

Theologians may argue over the interpretation of words, but Jesus' own testimony undoubtedly implies that the Kingdom of God was in their presence in His Person and ministry. Therefore, the last phrase of Luke 17:21 should be translated as, "The kingdom of God is among you." Barnes' Notes, Tyndale New Testament Commentary, Expositor's Bible Commentary, The New International Biblical Commentary, and The Interpreter's Bible all agree on this conclusion. He was in their midst, and He was within the Kingdom of God.

When this is combined with John 18:36 (where Jesus declares that His Kingdom "is not from here") and many other scriptures pointing to the establishment of God's Kingdom with power at Christ's return, we can understand that it is both a present and a future reality. In addition, it has both heavenly and earthly aspects. On one hand, it is present and near in the people to whom God has given His Spirit and has chosen to represent Him. On the other, it is distant in terms of time and as a geographical and governing reality. As a present reality, it is small, goes virtually unnoticed, and rules over little. Yet, in the future, at Christ's return, it will dominate and rule the earth. It is certainly not established in its fullness on earth now. Nonetheless, Scripture also proves that it is a present, earthy reality having earth-bound, flesh-and-blood citizens who are, in the Bible's terms, "spiritually minded" or "in the Spirit."

— John W. Ritenbaugh

To learn more, see:
Born Again or Begotten? (Part One)