A word that is formed by combining parts or letters from the words they represent. For instance, modem is an acronym that is derived from MODulator/DEModulator. Often these are the first letters of each word of a long term.  By strick standards the acronym that is formed has to be a pronouncable word. So radar and NATO are acronyms. In everyday jargon, however, other abbreviations like BTW (by the way) are sometimes considered acronyms.