Nutmeg and Mace are two distinctly different tasting spices that come from the same tropical fruit. Nutmeg is the seed of an apricot-like fruit on the nutmeg tree and mace is the bright red membrane that surrounds the seed. When the fruit is picked, it is split and the seed removed. The red membrane is scraped off and dried and turns orange-red in the process.
Nutmeg is sold whole or ground. Ground nutmeg loses flavor quickly, so it should be purchased in small quantities. Whole nutmeg retains its flavor much longer and can be easily ground with a nutmeg grater or microplane.
Mace is much more expensive than nutmeg because it takes 400 pounds of nutmeg to make 1 pound of mace.* It can also be purchased whole (known as blade mace) or ground.
*Field Guide To Herbs and Spices, Aliza Green, 2006