Answer
After Noah's family repopulated the earth, God scattered the peoples into many nations (Tower of Babel [Gen. 11:9]). From one of these nations, God chose Abram (a.k.a. Abraham) to begin a new and great nation (Gen. 12:2), with whom he would establish his covenant. One of Abraham's children, Isaac, was chosen to be the heir of that covenant (Gen. 17:19,21; 22:16-18), and his son Jacob (a.k.a. Israel) inherited the covenant promises through him (Exod. 2:24; Lev. 26:42; 2 Kings 13:23). From Jacob descended the tribes of Israel, the people who later came to be known as Jews. The Gentiles were the rest of the nations. The biblical terms translated "Gentiles" (the Hebrew term goyim and the Greek term ethnoi) both simply mean "nations" or "peoples." As the Bible uses the terms, they do not primarily indicate genetic association or "race," but nationality. Genetic dissimilarities between Jews and Gentiles were incidental to the more fundamental national/covenantal distinction between God's people and the rest of the world.
Answer by Ra McLaughlin
Ra McLaughlin is Vice President of Finance and Administration at Third Millennium Ministries.