Martin Luther
On Sacraments
If it was clear what to do about the papacy, the matter of the sacraments was more difficult. Some, Luther rejected almost at once: the sacrament of ordination was out because by 1521 he was arguing that there should be no priests. Or, to be more accurate, he was arguing in favor of the notion of the priesthood of all believers. Everyone was a priest; any Christian could perform the rites of the faith, and beyond these no Christian held any special religious station.
Extreme Unction was rejected out of hand because there was no foundation for it in Scripture. Penance was likewise rejected for like reasons. Luther retained confirmation as a rite, but denied that it was a sacrament. He held similar views on marriage: it was a part of life and even a part of Christian life, but it was not a sacrament.
That left two: baptism and communion. Both these Luther did indeed view as sacramental, and on both there were bitter disputes among the reformers. Each deserves specific treatment regarding Luther's particular position.
On the Eucharist
Luther regarded the Mass as an abomination, all the worse because at its heart was the most important of all Christian ceremonies: the re-enactment of the Last Supper. Luther stripped away all the extra rituals but left the core event, the taking of bread and wine. You will notice that both wine and bread were part of the Lutheran communion. He, like the Hussites, could find no Biblical justification for excluding the faithful from the full commemoration.
Very early on, however, the question was raised as to the nature of what transpired at communion. The Catholics taught that the bread and wine were, at the moment of the elevation of the Host, miraculously transformed by the Holy Ghost into the actual body and blood of Christ. This transformed substance retained the appearance of bread and wine, but its essence was truly changed. It was no longer bread and wine.
Luther rejected this, but he had some difficulty describing what exactly did happen. His position by about 1524 was that of consubstantiation: that the bread remained bread, the wine remained wine, and the body and blood of Christ were present. Both were there together. Other reformers (e.g., Zwingli) argued that the bread remained only bread, the wine only wine, and that communion was only a commemoration and nothing more. Luther would not go that far. For him, the communion meal had to retain its essentially miraculous nature.
On Baptism
The other sacrament Luther retained was baptism. He made almost no changes here. He recognized the legitimacy of infant baptism and rejected the notion of adult re-baptism. There were no priests and no holy water, but the ceremony of baptism remained sacred and central.