Muppet

Etymology 1
Most likely a variant of

Etymology 2
Coined by as an alteration of puppet. Henson had claimed the word was a, but later recanted.

Noun

 * 1) A type of puppet created by Jim Henson or his studio, typically operated with one hand of the puppeteer inside the head and a rod or glove to move one arm of the puppet.
 * 2) One of a group of established puppet characters acting as a sort of repertory company on ', and/or appearing on '.
 * 3)   (fool).

Usage notes
Puppets created by the Jim Henson Company following Disney's acquisition of the Muppets IP are not typically referred to as Muppets. Creations of Jim Henson's Creature Shop have never been considered Muppets.