You can unpack a .tar.gz file into the current directory like this:

tar -xzvf archive.tar.gz

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The options used are

-x
: Extract

-z
: Unzip

-f
: Process a file input

-v
: Be verbose, i.e. print each extracted file

Side notes:

• The dash is optional (tar xzvf ... works as well).
• For .tar.bz2 archives, use j instead of z (tar xjvf ...`)
• In order to create a *.tar.gz archive, use -c flag instead of -x flag.
• The order of parameters matters.