What PGP (like pretty much any software that can do bulk data encryption with public keys) does is hybrid encryption. Basically, it generates a random key for a symmetric cipher (e.g. AES), encrypts the file with that randomly generated key, and then encrypts the random key with the recipient's public key and attaches it to the encrypted file. When decrypting, it first uses the recipient's private key to decrypt the encrypted symmetric key attached to the file, and then uses that symmetric key to decrypt the actual content of the file.
Wikipedia's article on PGP has a nice diagram illustrating this process:
Diagram from Wikimedia Commons, by "xaedes & jfreax & Acdx"; used under the CC By-SA 3.0 license.
One of the main reasons why hybrid encryption is so widely used is that symmetric ciphers like AES tend to be much (as in, hundreds or thousands of times) faster than asymmetric ciphers like RSA in encrypting large amounts of data. But it also has a number of other convenient features — including, notably, that it's very easy to extend the process to allow for multiple recipients, simply by making multiple copies of the random symmetric key, encrypting each one with a different recipient's public key, and attaching all of these encrypted keys to the message. The recipient then just needs to locate the correct encrypted key (e.g. based on attached metadata, or even just by trying them all until they find one that decrypts into something sensible and consistent), decrypt it and then proceed to decrypt the data with it.