This phrase comes from chapter 4 of the Big Book, 'Lack of power, that was our dilemma.
We had to find a power by which we could live, and it had to be a Power greater than ourselves.' As alcoholics, our central problem is powerlessness over alcohol.
In order to overcome alcoholism, we must first admit that we are powerless over it. If we admit to that powerlessness, we are given the power we need.