From The Free On-line Dictionary of Computing (27 SEP 03) :
BibTeX
A Tex extension package for bibliographic
citations, distributed with LaTeX. BibTeX uses a
style-independent bibliography database (.bib file) to produce
a list of sources, in a customisable style, from citations in
a Latex document. It also supports some other formats.
BibTeX is a separate program from LaTeX. LaTeX writes
information about citations and which .bib files to use in a
".aux" file. BibTeX reads this file and outputs a ".bbl" file
containing LaTeX commands to produce the source list. You
must then run LaTeX again to incorporate the source list in
your document. In typeset documents, "BibTeX" is written in
upper case, with the "IB" slightly smaller and with the "E" as
a subscript. BibTeX is described in the LaTeX book by
Lamport.