The first recorded instance of the use of the word 'moustache’ comes from a translation of a book written in French in the 1400s. But that’s not the origin of the word, according to etymologists. The French took the word from the Italians, who originally borrowed it from the Greek world ‘mustax’.
The spelling of the word denoting the fringe of hair on the upper lip typically depends on which side of the Atlantic Ocean the writer is located. In Europe, the word retains the ‘o’, while the ‘o’ is dropped in the American spelling. Both European and American writers and speakers also use the Italian-derived word ‘mustachio’ to denote facial hair adornment that is particularly full and luxurious.
Pronunciation of the two words is similar. Both words are typically accented on the second syllable. The vowel sounds in moustache are pronounced as a ‘moo’ sound, while the first syllable of mustache sounds just like it is written, like the word ‘must’. The Europeans say the vowel in the second syllable with a sound like ‘path’ and the final consonants as they would the ‘sh’ in ‘sheet’. Americans say the final ‘a’ sound like the word ‘act’. In America, the ‘sh’ is a bit softer. Americans also often pronounce the word with the stress on the first syllable.
The differences in the spelling and pronunciation of the words doesn’t really matter, though. Both refer to the same decorative hair on the upper lip, whether it’s simple or ornate, and can be and often are used interchangeably without misunderstanding on the part of listeners or readers.