The previous post is good, but even though a number of sources support the claim, I'm not sure that the name "Nazi" is an blend of the beginning sounds of the first two words in the full name of the party.
The full party name, at least at one point, was indeed "National Socialist German Workers Party." The first word, as it's said in German, is pronounced "na-TSI-o-nal." The second word, again in German, is pronounced "so-TSI-o-leest." The abbreviated term "Nazi" could very well just comes from a shortening of the first word. Otherwise, I would expect the term to be "Naso," not "Nazi."
I've lived and worked in Germany for over five years, speak fluent German, and am certain that Germans still use abbreviated terms like this all the time, such as "Asi" (from "Asozial," an extreme nonconformist). According to the Online Etymology Dictionary, Germans used to shorten "Socialist" to "Sozi" and used that term as a model for the newer term "Nazi," although I've never heard the term "Sozi" used.
The Nazis were the political party, led by Adolf Hitler, who controlled Germany during World War II and the years leading up to it.
The word "Nazi" comes from the German name for the political party. The official name of the party was the National Socialist German Workers Party and the first two words when abbreviated, make "Nazi."
The Nazis took power in Germany in 1933. Their main ideas were that Germany should be strengthened (so that it could once again be a major military power) and that Jews were a major problem for Germany.
The Nazis also believed that the typical German had blond hair, blue eyes and the German nose (not the Jewish nose). The Nazis believed that anybody who didnt look like that was not a true German. The Nazis killed anybody that didn't look like a true German because they thought Jews were holding them back. Nazis also wanted Germany to be filled with perfect Germans so they could be a perfect country.