The Truth About the Spanish Inquisition by Thomas F. Madden is a great article which clears up a lot of misinformation about the Inquisition.
One of the most enduring myths of the Inquisition is that it was a tool of oppression imposed on unwilling Europeans by a power-hungry Church. Nothing could be more wrong. In truth, the Inquisition brought order, justice, and compassion to combat rampant secular and popular persecutions of heretics. When the people of a village rounded up a suspected heretic and brought him before the local lord, how was he to be judged? How could an illiterate layman determine if the accused's beliefs were heretical or not? And how were witnesses to be heard and examined?
The medieval Inquisition began in 1184 when Pope Lucius III sent a list of heresies to Europe's bishops and commanded them to take an active role in determining whether those accused of heresy were, in fact, guilty. Rather than relying on secular courts, local lords, or just mobs, bishops were to see to it that accused heretics in their dioceses were examined by knowledgeable churchmen using Roman laws of evidence. In other words, they were to "inquire" -- thus, the term "inquisition."
From the perspective of secular authorities, heretics were traitors to God and king and therefore deserved death. From the perspective of the Church, however, heretics were lost sheep that had strayed from the flock. As shepherds, the pope and bishops had a duty to bring those sheep back into the fold, just as the Good Shepherd had commanded them. So, while medieval secular leaders were trying to safeguard their kingdoms, the Church was trying to save souls. The Inquisition provided a means for heretics to escape death and return to the community.
Most people accused of heresy by the medieval Inquisition were either acquitted or their sentence suspended. Those found guilty of grave error were allowed to confess their sin, do penance, and be restored to the Body of Christ. The underlying assumption of the Inquisition was that, like lost sheep, heretics had simply strayed. If, however, an inquisitor determined that a particular sheep had purposely departed out of hostility to the flock, there was nothing more that could be done. Unrepentant or obstinate heretics were excommunicated and given over to the secular authorities. Despite popular myth, the Church did not burn heretics. It was the secular authorities that held heresy to be a capital offense. The simple fact is that the medieval Inquisition saved uncounted thousands of innocent (and even not-so-innocent) people who would otherwise have been roasted by secular lords or mob rule.