What term names a word formed from initial letters, such as NATO? The answer is acronym.
An acronym is formed from parts of a longer name or phrase, commonly its initial letters, and is pronounced as a word. NATO comes from “North Atlantic Treaty Organization,” while UNESCO comes from “United Nations Educational, Scientific and Cultural Organization.”
A common mix-up is “initialism.” Initialisms are also built from initial letters, but they are pronounced letter by letter, as in BBC or FBI. In everyday usage, however, acronym is often used as the broader label for both types. Some acronyms become ordinary words, such as radar and scuba, whose original expansions are now less familiar to many speakers.
The word acronym entered English in the twentieth century, from Greek roots meaning “tip” or “summit” and “name.” NATO is a particularly clear example because its letters form a pronounceable word rather than a sequence of spoken letter names.