Acronyms and initialisms are both abbreviations made from the first letters of words, but the key difference is how they’re pronounced.
Acronyms, like NASA (National Aeronautics and Space Administration) or SCUBA (Self-Contained Underwater Breathing Apparatus), are pronounced as words.
Initialisms, like FBI (Federal Bureau of Investigation) or ATM (Automated Teller Machine), are spoken letter by letter.
Think of it this way: acronyms roll off the tongue as a single word, while initialisms make you spell it out. For example, NASA is an acronym, but FBI is an initialism.
Both acronyms and initialisms are types of abbreviations. Abbreviations are the umbrella term for any shortened form of a word or phrase, and acronyms and initialisms are just two specific ways to do it. So all acronyms and initialisms are abbreviations, but not all abbreviations are acronyms or initialisms — for example, “Dr.” for “Doctor” or “St.” for “Street.”
Some abbreviations, like FAQ, can go either way depending on who’s saying it — initialism, pronounced eff-ay-cue, or acronym, pronounced fak.
