Most of the time when people quote this teaching it’s to say that as a Christian we are not allowed to say that anything is ever wrong.  Looking at the context of the verse will give clarification.

Do not judge, or you too will be judged. For in the same way you judge others, you will be judged, and with the measure you use, it will be measured to you.

Why do you look at the speck of sawdust in your brother’s eye and pay no attention to the plank in your own eye?  How can you say to your brother, ‘Let me take the speck out of your eye,’ when all the time there is a plank in your own eye?  You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye.  (Matthew 7:1-5)

The interpretation that uses this verse to prohibit standards, values or morals is erroneous because it is refuted by the entirety of scripture. The Old and New Testaments as well as Jesus’ sermons and parables are filled with ideas, behaviors, attitudes and appetites that God directs us to make judgments about.  Jesus Himself tells us to “stop judging by mere appearances, and make right judgments.” (John 7:24)

The correct interpretation of the “judge not” passage (because it agrees with the whole counsel of scripture) is that Jesus has forbidden judgment for the purpose of putting down others to exalt one’s self.  Jesus is demanding vigilant self-examination regarding motives and actions.  This is considerably challenging, as we can all attest.  I am certainly guilty of breaking this command. God does want the speck to be removed from the eye—even a grain of sand can be damaging and painful.  But he desires you to help your brother to remove the speck of sand and you yourself to have clear vision while doing so.

And this is my prayer: that your love may abound more and more in knowledge and depth of insight,so that you may be able to discern (judge) what is best and may be pure and blameless for the day of Christ…  Philippians 1:9-10