Why is setting alias in .profile not working?

There are two related reasons why aliases don't always work when put in the .profile file. The first is that the .profile (or .bash_profile) file is only run for a login shell. If you are starting bash in a terminal window under X, your terminal emulator (e.g. gnome-termanl) probably isn't running bash as a login shell. [Most have an option to change this if you want but the default (for gnome-termal anyway) is not to run it as a login shell.]
The shell will be an interactive shell and so .bashrc will be run.

However, normally bash has been run as a login shell back when the X session was being started. So if there are alias commands in .profile they will have been executed along with setting environment variables like the PATH etc. When a terminal window is opened a new instance of bash is run to prompt for, and execute commands in that terminal window. Unlike environment variables, aliases can not be exported from one instance of bash to a new one started by it. So the aliases are not passed on to the new shell.

To see this, try this experiment:

export ROBERT=bob
alias james=jimmy
echo $ROBERT
alias james
bash               #start a new bash instance
echo $ROBERT
alias james
exit               #end the new bash instance and revert to the original one
echo $ROBERT
alias james

Note that .bashrc is not run by bash when it is started as a login shell. So putting your aliases there won't always work unless your .bashrc is sourced from your .profile, which is a very common practice.

I'm pretty sure that lpanebr's idea will work, but here's a more elegant solution. Do that alias command in .bashrc That's how I do it, or some people prefer to add a file dedicated to alias. Call it .alias or whatever and add .alias to your .bashrc

Wish I could do formatting like @lpanelbr. I wonder if there is a wiki?