Short answer: upside down keeps dust out. Right way up lets a mug that was not quite dry finish drying. Both sides are right about their own risk, which is why the argument never ends. Put the mug away dry and the argument disappears, because then upside down wins on every count.
Here is what each camp is actually afraid of, what professional kitchens are required by law to do, and where our own mug stacker sits in all of it.
Why this is even a debate
It is not a made-up question. Somebody asked it on Quora in exactly these words: "Do you store cups in the cabinet right side up, or upside down? Why?" And when a Reddit user put the same question to a home forum, the replies split down the middle and stayed split.
That thread was written up by AOL under the headline Social Media's Latest Debate: Should You Store Your Mugs Facing Up or Down?, and the quotes below come from that write-up rather than from the thread itself.
The case for right way up
Three worries, and none of them are silly.
Trapped moisture. "I leave them upright. I'm scared of any moisture being trapped if I leave them upside down." A mug that goes into the cupboard with a film of water inside, rim down, has nowhere to send that water.
Humidity that needs somewhere to go. "Inside closed cupboards, right side up to allow for humidity to escape." A closed cabinet is not a ventilated place.
The shelf itself. "I very rarely properly wipe down the inside of my cupboards after every time I touch it and I don't want my clean mugs coming in contact with it." This is the one people skip, and it is the strongest of the three. Rim down means the part your mouth touches is resting on the shelf.
The case for upside down
Dust. "On open shelving or on top of machine, upside down to avoid gathering of dust." An open shelf collects dust, cooking grease and whatever the air is carrying, and a mug sitting rim up is a small open container for it.
Stability. "For cups and glasses where they're narrower at the bottom, they're more stable being stored upside down, and less prone to tipping over when you go rooting around for one."
Warmth, for the coffee people. "I store them upside down on my coffee machine. That way, the heated air from the machine gets trapped in the cup."
What professional kitchens are made to do
This is where the argument gets settled, because commercial kitchens are not allowed to have an opinion about it.
Food safety rules, adopted from the national food code, tell a restaurant how clean cups have to be stored. They must go in a self-draining position that allows air drying, and then be kept covered or inverted. A separate rule says they must be air-dried and may not be dried with a cloth.
Read that carefully, because it is not a vote for either camp. It is both, in order. Drain and air dry first. Then store rim down or covered.
The people arguing on the internet have each taken one half of that rule and dropped the other.
So what should you actually do
Dry the mug properly, then store it upside down.
Properly means drained and air dried, not wiped with a tea towel and put straight away. A mug out of the dishwasher at the end of a cycle is usually still warm and slightly damp inside. Leave it on the rack another twenty minutes. That one habit is the whole answer, and it is the same answer we reached writing about why toilet brush holders smell and about where to keep tumbler lids. Damp plus enclosed plus dark is the problem every time. The shape of the object barely matters.
Two things worth adding once the mug is dry.
Put something between the rim and the shelf. A cheap shelf liner solves the dirty-cupboard objection and the chipping one at the same time. House Digest makes the point that rim-down storage puts your drinkware at a bigger risk for chips and cracks against a bare hard shelf.
And if your mugs live on an open shelf rather than behind a door, stop reading and turn them over. There is no case for rim up in open air.
Where our mug stacker sits in this
We should say this plainly, because it is our product and the question lands on it.
An ELYPRO Mug Stacker sits on the rim of the lower mug like a lid, and the second mug goes on top of it upside down. So a stacked pair ends up with the bottom mug covered and the top mug rim down, which is the dust answer twice over, and the top mug's rim never touches the mug below it or the shelf.

The honest limit: there is no airflow in that arrangement. The bottom mug is under a plastic disc and the top mug is closed against it. If you stack mugs that are still damp, you have built exactly the warm dark box this whole article is about avoiding. Dry them first. That is not a caveat we are burying at the bottom of a spec sheet, it is the condition the product works under.

It is $24.99 for a six pack, which takes twelve mugs, rated 4.77 from 127 reviews. High-strength food-safe nylon, dishwasher safe, no tools, no drilling. Patented design, US 9199765 B1, and by now over a hundred imitations of it.
When none of this matters
If you own four mugs and use all four every day, they never sit still long enough to gather dust or grow anything. Store them however you like.
If your cabinet has a door, your kitchen is dry, and your mugs go through the dishwasher weekly, the difference between the two methods is very small. This is a question about mugs that sit for weeks, not mugs in daily rotation.
And if the actual problem is that the mugs do not fit in the first place, that is a different article: how to fit more mugs in a kitchen cabinet.
Questions people ask
Does storing a mug upside down trap moisture?
Only if the mug was damp when you put it away. A dry mug stored rim down traps nothing, because there is nothing to trap. This is why the food safety rule puts air drying first and inverted storage second. The order is what makes it safe.
Will an upside down mug get scratched or chipped?
The rim is the thinnest part of a mug and the shelf is usually hard, so yes, it is a real risk over years. A shelf liner, a folded cloth or a rack that holds the rim off the surface removes it.
Do mugs really collect dust in a closed cabinet?
Less than on an open shelf, but they are not sealed. Cabinet doors are not airtight, and a mug that has sat rim up since spring has been collecting whatever the kitchen air carries, cooking grease included.
Should I store a mug upside down if it is still a bit damp?
No. Leave it out until it is dry. Rim up is the lesser evil for a damp mug, but the right answer is not to put it away yet at all.
Does the same apply to glasses and tumblers?
Yes, and more so for anything narrower at the base, which is steadier upside down. Tumbler lids are their own problem because of the gasket, and we wrote about those separately in how to store tumbler lids.