ANSWER: The incident involving Sarah and her lie took place after her and Abraham were journeying through the Land of Canaan. As they were traveling South from Bethel a severe famine hit the land. They decided to travel further south and attempt to live in Egypt for a while until the famine passed. Abraham, as they grew near Egypt, then came to the decision to ask Sarah to lie for him to protect his own safety.
When he (Abraham) was about to enter Egypt, he said to his wife Sarai (Sarah), "I know well that you are a woman beautiful in appearance; and when the Egyptians see you, they will say, 'This is his wife'; then they will KILL ME, but they will let you live.
"Say you (Sarah) are my sister (a lie), so that it may go well with me because of you, and that my life may be spared on your account" (Genesis 12:11 - 13, NRSV).
Sarah was asked to lie, or at least tell the Egyptians a half-truth, in order to protect Abraham's life. We discover the half-truth when, in Genesis 20, he again uses her to save himself from a powerful ruler, which in this case was the king of Gerar named Abimelech. After being confronted by the king he admits that Sarah was more than his sister.
I thought, 'There is absolutely no fear of God in this place. They will kill me because of my wife.' Besides, She is really my sister, the daughter of my father though not the daughter of my mother, and she became my wife (Genesis 20:11, HCSB).
Marriages between men and their half-sisters were not uncommon in ancient times. Although the response Sarah was coached to give (on two occasions) concerning the nature of her relationship with Abraham was not a complete lie, it was nevertheless only part true and a deception (she was, after all, married to him!).
Abraham's concerns and fears that he would be killed because of Sarah were not entirely unwarranted. When the Egyptians met her the Bible states they, "saw that the woman was very beautiful" (Genesis 12:14, NASB). After discovering her beauty they took her immediately to Pharaoh's house! Abraham's life was not only spared but because the Egyptians believed he was the brother of Sarah he was given donkeys, camels and even slaves (Genesis 12:16)!
Amazingly, although Sarah was 67 years old at the time, her physical beauty was so striking and unique that powerful men were willing to murder for her! Tradition states that Abraham hid her in a box just before he entered Egyptian territory. When the chest was opened by officials to determine any duty owed, they saw how absolutely gorgeous Sarah looked (1906 Jewish Encyclopedia). Each of the officials wanted her so bad that they were outbidding each other to get her!
It was only after taking Sarah into his house, with plans of making her his wife, that Pharaoh discovered the lie (Genesis 12:17 - 20). He then angrily confronted Abraham and threw the both of them out of the country!