"Shy" is used to describe people, and often suggests that the person will grow out of it. A child might be shy at age 3 but out-going at age 4. Shy means reserved, or very easily embarassed, or very cautious, usually relating to being in a room full of people. A person might be shy around other people, but assertive in email. "Timid" is often used to describe animals, but can also be used for people. A timid horse might be scared by a small dog. Timid implies fearful, or unassertive. If you say a child is timid, this implies that they might be this way for their whole life. If describing yourself, you would want to say "shy" to mean that it's sometimes hard for you to take a chance and say something out loud. (If you say you're timid, this has a slightly negative meaning.)

Shy usually means you are too embarrassed to say anything, like a shy person at a party doesn't want to join the conversation. Timid like Maria said, is fearful of things, usually you imagine the word "timid" with a mouse, if you are timid like a mouse, you are cautious of everything around you and won't take risks unless you have to.

I'm not an English speaker but I think they are usually interchangeable. But, timid sometimes can also mean fearful (unwilling to take risks) hope it helps