The answer to this question differs depending on which religion is used to find the answer. When the word “God” is mentioned, most think immediately of the Christian deity and limit a discussion about God to a discussion defined by Christian parameters. But it must be remembered that each religion has its definition of God or something that holds that same placeholder in the religion. To elaborate on this point and show that, depending on which spiritual outlook is focused on, God can be either within or outside humans.
Christianity, Judaism, and Islam
Christianity and its related western religions (Judaism and Islam) tend to point towards God existing outside of human beings. Looking at Genesis, God creates heaven and earth and resides in heaven, setting aside earth for humans and other mortal creatures. Also lending to God existing separate from humans is the argument that Jesus was God bound in mortal flesh to come and die for human sin.
If God existed within humans, He would have become absent from the rest of the world to confine Himself into that single entity. But, as the Christian doctrine suggests, the world cannot exist without God’s presence, He could not have pulled his essence from the rest of the world in order to form a single human frame. The Christian view of the afterlife also involves the soul leaving the body and going to an extra-dimensional plane where God resides in Heaven. While it can be argued that God resides within each human by quoting some texts from the Bible (such as “the kingdom of Heaven is within all of us”), but predominately it seems and was most commonly accepted (beyond theology discussions) that God exists in Heaven and humans will be able to reach him through Jesus after his or her death.
Looking to the east, Hinduism offers quite a different version of the world. To briefly sum up Hinduism for those unfamiliar, the religion boasts the status of the world’s oldest religion and is composed of hundreds of deities. However, the most common three are Brahma, Shiva, and Vishnu.
The important concept for this discussion, however, is that all three gods are merely manifestations of one god (as are all the gods) named Ishvara. More importantly, Ishvara is the catchall name for the entire collection of spiritual essence in the universe. And here’s the part that shows god exists inside of humans: everything existing, be it plant, rock, human, or animal, everything contains within it the same amount of divine essence. When humans (or anything else) die, their essence returns to a metaphysical realm where it resides for a limited time before returning to earth. Taking this view of the universe into consideration, god resides within each of us in equal parts.
Mostly this debate is limited to whether a Christian God resides within or outside humans.
But by expanding the parameters of the discussion, different religions show clear-cut examples of both sides of this discussion. It all depends on what each individual believes, and which belief structure the question is being filtered through, to come to a final answer on a question of this magnitude.