An abbreviation consisting of the first letter or letters of words in a phrase (for example, IRS for Internal Revenue Service), syllables or components of a word (TNT for trinitrotoluene), or a combination of words and syllables (ESP for extrasensory perception) and pronounced by spelling out the letters one by one rather than as a solid word.

Source: The American HeritageĀ® Dictionary of the English Language, Fourth Edition
Copyright Ā© 2000 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.

E.g.: Differs from an acronym in that acronyms can be pronounced and often become words themselves that are then written in lowercase, e.g.:

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