two of allah's  names are the most gracious and the most merciful.

every sura (chapter) in the quran, allah almighty starts it with "in the name of allah, the most gracious, the most merciful".

in surat al-hijr allah says: "inform my servants that i am the forgiver, most merciful (49) and that my retribution is the most painful retribution (50)"

abu huraira once said: "prophet muhammad (peace be upon him) said: "when allah created the creation as he was upon the throne, he put down in his book: verily, my mercy predominates my wrath."

abu huraira said: i heard the messenger of allah saying: allah created mercy. the day he created it, he made it into one hundred parts. he withheld with him ninety-nine parts, and sent one part to all his creatures. had the non-believer known of all the mercy which is in the hands of allah, he would not lose hope of entering paradise, and had the believer known of all the punishment which is present with allah, he would not consider himself safe from the hell-fire."

on the authority of anas (may allah be pleased with him), who said: i heard the messenger of allah (may peace be upon him) saying: allah the almighty said:

o son of adam, so long as you call upon me and ask of me, i shall forgive you for what you have done, and i shall not mind. o son of adam, were your sins to reach the clouds of the sky and were you then to ask forgiveness of me, i would forgive you. o son of adam, were you to come to me with sins nearly as great as the earth and were you then to face me, ascribing no partner to me, i would bring you forgiveness nearly as great at it.

the messenger of allah (peace be upon him) told an example about allah's mercy upon people; 

"a woman has lost her child, she was so scared looking for him, and when she found him, she took him over her chest and fed him. the prophet said to us, "do you think that this lady can throw her son in the fire?" we replied, "no, unless she is forced to do." the prophet then said, "allah is more merciful with his people than this lady to her son."

one of the prophet's (peace be upon him) qualities was mercy and forgiveness; allah told us about this in the holy qura`an:

"there has come unto you a messenger from amongst yourselves. it grieves him that you should receive any injury or difficulty. he is anxious over you, for the believers full of pity, kind, and merciful."  (at-tawba: 128)