There are many similarities and differences between mentoring and coaching. However the most important distinction is:

Coaching is used when there is a well-defined goal that is based on improving skills and performance.

Mentoring is valuable for career development, providing general guidance, setting and achieving goals, making decisions or facilitating problem solving.

Coaching is about performance, mentoring is personal. So while it is appropriate and desirable for a person's immediate supervisor to coach them, a mentor is best not to be in the direct reporting line.

Below is a little more detail on each:

Mentor

A mentor is generally someone farther up the career ladder than you, someone you admire for their professionalism, for their knowledge and for their ability to succeed in difficult situations.  They are politically savvy in business and are admired for their fair treatment of others.

A mentor provides career guidance and can help with career opportunities because they are generally a senior-level manager from within the same company or industry.  They act as your advisor and provide suggestions and guidance on development opportunities, career paths, and leadership strategies.  A mentor relationship may be formal (arranged between the individuals or with the help of the HR department) or informal.  A critical element within a mentoring relationship is mutual respect.  A mentor is generally not paid for services.

Coach

A coach focuses specifically on your personal development and learning. Coaches observe your performance, analyze your skills, behavior and attitude and provide you with an unbiased, outside perspective to help you improve your efficiency and effectiveness.  A coach may be a manager or colleague within your company or industry; however, a coach is most commonly someone who is hired by you or hired through your human resources department for a contracted length of time. The coach works with you during the contracted time period on such areas as knowledge transfer/training, behavior modification, behavior modeling, and image enhancement. They may help you develop or enhance a skill set and improve leadership capabilities.

A coach is hired to help you become the best you can be both personally and professionally; in essence, a tutor. Hiring a coach is usually a formal process where the coach and “coachee” agree upon specific coaching goals, discuss and agree on expectations of the relationship (such as confidentiality and safety), agree on how they will communicate and schedule meetings (over the telephone, in person, via email, etc.), agree on how they will measure success and the specific metrics that will be used, agree on the time commitment for the coaching sessions, etc. In a coaching relationship, it is critical for you to be open to having your coach observe your work and for you to be open to feedback. Respect for your coach is essential for the process to work.