Isaac was the subject of the tenth and most difficult test of Abraham’s faith: G-d commanded Abraham to sacrifice Isaac as a burnt offering. (Gen 22). This test is known in Jewish tradition as the Akeidah (the Binding, a reference to the fact that Isaac was bound on the altar).
But this test is also an extraordinary demonstration of Isaac's own faith, because according to Jewish tradition, Isaac knew that he was to be sacrificed, yet he did not resist, and was united with his father in dedication.
At the last moment, G-d sent an angel to stop the sacrifice. It is interesting to note that child sacrifice was a common practice in the region at the time. Thus, to people of the time, the surprising thing about this story is not the fact that G-d asked Abraham to sacrifice his child, but that G-d stopped him!
Judaism uses this story as evidence that G-d abhors human sacrifice. In fact, I have seen some sources indicating that Abraham failed this test of faith because he did not refuse to sacrifice his son! Judaism has always strongly opposed the practice of human sacrifice, commonplace in many other cultures at that time and place.
Sources: Judaism 101