Luna (a.k.a, Earth's Moon) is larger than Pluto, at 3,476 kilometers in diameter, compared to just 2,274 kilometers for Pluto.
Pluto and its moon, Charon, have been considered a double planet system, as they are closer in size to (and distance from) each other than even the Earth- system, but they have also been considered the largest members of the Trans-Neptunian worlds, comets that roam mainly between Neptune and Pluto. Had Pluto been discovered today, instead of in 1930 by Clyde W. Tombaugh, it would have likely been considered the largest known comet in the Sol system.
The latest accepted theory on lunar formation is that during the early days of the creation of the Sol system, roughly 4 billion years ago, a Mars-sized body hit the still-molten Earth, causing a massive amount of debris to be flung into space. Eventually the debris settled into Earth orbit and merged into what we call Luna.
See these two Web pages for more information: