Keeping your bike parts properly lubricated is crucial for good performance. Lubrication protects moving parts from excessive wear caused by friction and keeps rust and corrosion from attacking exposed metal components.
Be careful, though -- over-lubricating can lead to poor performance and component damage (excess lubricant can attract dirt and other abrasive particles). As a general rule, excess lube should always be carefully wiped away before the bicycle is ridden.
When lubricating a number of parts at once, remember the order in which you apply the lubricants. Wiping off excess lube in the same order will give the lubricants time to soak in.
Frequency of lubrication
To keep a bike and all its parts in good condition, you must 'lube' it regularly. For those who ride their bikes daily this means about once a week in winter and every 2 weeks in summer. For those who ride perhaps weekly or monthly, monthly will suffice. Certainly lube your bike after every washing.
When you lubricate your bike, be sure to use lubricants that are suited to the weather conditions you'll be riding in. Rainy areas require more durable bike oils, while drier areas require lighter oils that won't pick up as much dirt. Also keep in mind that wetter conditions typically require more frequent lubrications.
What to do
Spray lube the brake pivots being careful to not get it on the pads or rims.
Spray lube the centre of the jockey wheels to keep them running smoothly.
Lube each of the main pivots on the rear derailleur, the top pivot and the chain cage pivot. Then wipe them lightly.
Lube the front derailleur. Lube around the chain cage and the gear shifters. Lube any point where the inner gear cable turns a corner.
Your chain is your bike's most "at risk" lubricated part. It should be lubricated frequently (to slow the rate of chain wear), and will benefit from being removed from your bike from time to time to be thoroughly cleaned in a solvent and re-oiled. The more frequently you lube your chain however, the less necessary off-bike cleanings will be.
In general, you should lubricate your chain whenever it squeaks or appears "dry." Lubing after wet rides will help keep your chain from rusting. Keep in mind that the type of chain lube you use will affect how often you need to lubricate. The chain should be soaked with whatever type of lube you choose to use, follow the instructions given. Give it time to penetrate and dry if necessary.
Lube the brake levers on the pivots. Pull the brake lever so you can lube the brake cable. If you leave the nipple dry, the cable may fray, so lube it also.
Lube all of the cables. Cables connect your brake and the derailleur assemblies to the levers you use to control them. They should be checked frequently (especially in wet conditions) and re-lubricated from time to time..
Hint for lubing gear cables.
Place your gears in the lowest gear (at the back, the largest chain ring), and then use your gear lever to effectively 'change up' to the highest gear (at the back, the smallest ring). This has the affect of providing a considerable amount of 'slack' for the cable to be easily lubricated.