Initiative

Every round, each combatant gets to do something. The combatants’
initiative checks, from highest to lowest, determine the order in
which they act.
Initiative Checks: At the start of a battle, each combatant makes
an initiative check. An initiative check is a Dexterity check. Each
character applies his or her Dexterity modifier to the roll. The DM
finds out what order characters are acting in, counting down from
highest result to lowest, and each character acts in turn. In every
round that follows, the characters act in the same order (unless a
character takes an action that results in his or her initiative
changing; see Special Initiative Actions, page 160). Usually, the DM
writes the names of the characters down in initiative order so that
on subsequent rounds he can move quickly from one character to
the next. If two or more combatants have the same initiative check
result, the combatants who are tied act in order of total initiative
modifier (highest first). If there is still a tie, the tied characters
should roll again to determine which one of them goes before the
other.
Monster Initiative: Typically, the DM makes a single initiative
checks for monsters and other opponents. That way, each player gets
a turn each round and the DM also gets one turn. At the DM’s
option, however, he can make separate initiative checks for different
groups of monsters or even for individual creatures. For instance,
the DM may make one initiative checks for an evil cleric of Nerull
and another check for all seven of her zombie guards.
Flat-Footed: At the start of a battle, before you have had a chance
to act (specifically, before your first regular turn in the initiative
order), you are flat-footed. You can’t use your Dexterity bonus to AC
(if any) while flat-footed. (This fact can be very bad for you if you’re
attacked by rogues.) Barbarians and rogues have the uncanny dodge
extraordinary ability, which allows them to avoid losing their
Dexterity bonus to AC due to being flat-footed. A flat-footed
character can’t make attacks of opportunity.
Inaction: Even if you can’t take actions (for instance, if you
become paralysed or unconscious), you retain your initiative score
for the duration of the encounter. For example, when paralysed by a
ghoul, you may miss one or more actions, but once the cleric casts
remove paralysis on you, you may act again on your next turn.
SURPRISE
When a combat starts, if you are not aware of your opponents and
they are aware of you, you’re surprised.
Determining Awareness
Sometimes all the combatants on a side are aware of their opponents,
sometimes none are, and sometimes only some of them are.
Sometimes a few combatants on each side are aware and the other
combatants on each side are unaware.
The DM determines who is aware of whom at the start of a battle.
He may call for Listen checks, Spot checks, or other checks to see
how aware the adventurers are of their opponents. Some example
situations:

The party (including Tordek, a fighter, and Jozan, a cleric, clanging
along in metal armor) comes to a door in a dungeon. The DM
knows that the displacer beasts beyond the door hear the party.
Lidda listens at the door, hears guttural snarling, and warns the
rest of the party. Tordek breaks the door open. Both sides are
aware; neither is surprised. The characters and displacer beasts
make initiative checks, and the battle begins.

The party explores a ruined armory, looking through the rusted
weapons for anything of value. Kobolds lurk in the nooks and
crannies, waiting for the right time to strike. Jozan spots one of
the kobolds, and the kobolds shriek and charge. The kobolds and
Jozan each get a standard action during the surprise round.
Kobolds that are close enough can charge adventurers and attack
them. Others can move to try to put themselves in advantageous
positions or shoot arrows at the flat-footed party members. Jozan
can cast a spell, attack, or take some other action. After the
surprise round, the first regular round begins.

The party advances down a dark corridor, using light spells to see
where they’re going. At the end of the corridor, outside the range
of the illumination, a kobold sorcerer doesn’t want to be
disturbed, and she angrily casts a lightning bolt. That’s the surprise
round. After the lightning bolt, the first regular round begins with
the party in a tough spot, since they still can’t see who attacked
them.
The Surprise Round: If some but not all of the combatants are
aware of their opponents, a surprise round happens before regular
rounds begin. Any combatants aware of the opponents can act in the
surprise round, so they roll for initiative. In initiative order (highest
to lowest), combatants who started the battle aware of their
opponents each take a standard action during the surprise round
(see Standard Actions, page 139). You can also take free actions
during the surprise round, at the DM’s discretion. If no one or
everyone is surprised, no surprise round occurs.
Unaware Combatants: Combatants who are unaware at the start
of battle don’t get to act in the surprise round. Unaware combatants
are flat-footed because they have not acted yet, so they lose any
Dexterity bonus to AC.