to set someone or something apart from ordinary use and give it over to God, so that it becomes holy; also, to honor as holy what already is
This verb was scarcely used in non-Jewish Greek. Jewish translators of the Old Testament took it up to render the Hebrew word for holiness (קדשׁ), and that is the world it carries into the New Testament: the altar, the priests, the firstborn, a people taken into God's possession. So its center of gravity is not moral self-improvement but a decisive act of dedication. To sanctify a thing is to lift it out of common circulation and assign it to God; once dedicated, it is holy because it now belongs to him.
The two senses below are facets of that one idea rather than separate words. The first looks at the act from God's side or an agent's side: God, Christ, the Spirit, or a holy object claims a person or thing for God and so makes it holy. The second looks from the worshiper's side: to treat as holy, to revere, to hallow what God has already made holy, above all his name and his own person.
This is why the New Testament can use one word for both the consecration of food at a meal and Christ's offering of himself at the cross. The act runs across a single range, from the everyday to the eternal, and it is usually something done to a person rather than something a person achieves. In the letter to the Hebrews it sits right alongside the language of cleansing: to be sanctified is to be brought near, given access to God, set within his holy sphere.