In this post, I'm assuming you're using the bash shell. This is typical on most Linux systems. To check it, use the command "echo $SHELL". This will tell you what shell you are using.
If you only want to access the alias from one user account, the best place is probably in the .bashrc file in your HOME directory. This file is read each time a shell is started. You can put your variables here too. If you want shell variables available in programs you launch from the shell, make sure you export them, else just a regular var=value will suffice.
If you want your aliases/variables available for all users on the system, edit the /etc/profile file, and put them there. Settings in this file get applied to shells for all users.
There are a few more places you can put these things. Sometimes the .bashrc file will contain a line something like this:
...which simply tells the shell to read instructions from the file ~/.bash_aliases. Ubuntu has this command in the default .bashrc (with a little check to make sure the file exists first), but it is commented out. Personally, I use the .bash_aliases file for all my aliases because I fond it neater to keep all the alias statements together. It's a matter of personal preference.
There are a few more places you might choose to put these sorts of commands, like ~/.bash_profile. read the bash manual page (FILES section) for a more detailed list of what files are read and when.
One note of caution: be a little bit careful when editing these file because you could make changes which make it difficult to start a new shell, the canonical example of this is someone naughtily adding "logout" to the .bashrc file, which closes the shell as soon as it starts...
What I usually do when editing the .bashrc is save the changes, then try to open a new terminal while the original one is still open. This just ensures that you've not made a typo or something which might cause a problem. It's very unlikely you'll do anything bad. I think I messed up like this once, but it's a good habit anyhow.