This compound is broken down into Nitrite by a bacteria called nitrosomonas. Nitrite is also harmful to fish. Another bacteria called Nitrobacter breaks down the Nitrite into Nitrate.
These colonies of bacteria are referred to as the Biological Filters of the Aquarium.
This is called the Nitrogen Cycle. The different compounds in the cycle are Ammonia-Nitrite-Nitrate.
In a new Aquarium which has just been set up, the beneficial bacteria which break down these compounds are absent. Hence, Ammonia can accumulate and reach dangerous levels which can be harmful to fish. Hence, fish should be added gradually over a period of weeks. This gives time for the bacteria to develop and colonize the aquarium.
These useful bacteria take a long time to establish themselves. They mostly live on the aquarium gravel and the filters. You must be careful not to damage these bacteria.
Bacteria can be damaged by the use of medication such as potassium permanganate or by washing the aquarium gravel and the accessories using soap.