The full quote:

Power tends to corrupt and absolute power corrupts absolutely.
    John Emerich Edward Dalberg-Acton (Lord Acton)
Lord Acton wrote this in a letter to Bishop Mandell Creighton in April, 1887. The topic at hand was the transgressions of the the papacy. Here is a larger passage to give the quote some context:
I cannot accept your canon that we are to judge Pope and King unlike other men, with a favorable presumption that they did no wrong. If there is any presumption it is the other way against holders of power, increasing as the power increases. Historic responsibility has to make up for the want of legal responsibility. Power tends to corrupt and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority: still more when you superadd the tendency or the certainty of corruption by authority. There is no worse heresy than that the office sanctifies the holder of it. That is the point at which the negation of Catholicism and the negation of Liberalism meet and keep high festival, and the end learns to justify the means.

Selected Writings of Lord Acton, edited by J. Rufus Fears, volume II (Liberty Fund: Indianapolis, 1985) 385
Bartlett's Familiar Quotations, 16th Ed. ISBN 0-316-08277-5