When an interactive login shell starts, it automatically executes one or more pre-defined files. Different shells execute different files; see the documentation of each shell for further information.
Most shells first run some global file, for example, the Bourne shell (/bin/sh) and its derivatives execute /etc/profile; in addition, they execute .profile in the user's home directory. /etc/profile allows the system administrator to have set up a common user environment, especially by setting the PATH to include local command directories in addition to the normal ones. On the other hand, .profile allows the user to customize the environment to his own tastes by overriding, if necessary, the default environment.