The TechZone explains how Global Positioning System (GPS) works.

If you have ever used map and compass, you will understand a little about how the GPS works. In order to find your position on a map, you need to have three points of reference. The intersecting line from the reference points is where you are. Map and compass work uses triangulation (bearings), GPS uses trilateration (distances) to calculate location. Satellites orbiting the earth emit unique signals that can be received by a GPS. The GPS software interprets the signal, identifying the satellite that it came from, where it was located, and the time that it took for the signal to reach the system. Once the receiver has both time and distance it begins to determine position.

How GPS Works