What defines whether or not a wolf becomes hostile?

In Minecraft, what actions does the player need to avoid in order to keep the wolves peaceful so they don't murderously devour the player? I was just walking, and I attacked a sheep. All of a sudden I had three wolves on me which, when I attacked them backed,it only added more wolves to the fray.

As has already been stated, untamed wolves will only attack you if you attack them, regardless of whether it is by hitting them with a sword, a tool, a porkchop, or even your bare hands. Note that even projectiles which cause no damage (such as thrown eggs or snowballs) will still cause passive mobs (e.g., Wolves and Zombie Pigmen) to become hostile.

According to the wiki: "When a wild wolf attacks a sheep, they will appear to become hostile, but will not attack the player." In your case, I'm guessing the wolves were going for the same sheep as you. You, seeing the evil look in their eye thought they were aggressive towards you and attacked them, causing them to retaliate.

Don't hit them and they won't attack you.