The growth characteristic and stability of monolayer MgO islands on Au(111) have been explored with low-temperature scanning tunneling microscopy (STM) and density functional theory. Depending on the deposition temperature and oxygen partial pressure, either compact MgO patches with a (001) lattice configuration or triangular/hexagonal islands with a (111) lattice are observed in the experiment. Total-energy calculations revealed that the relative stability of the two types of nanostructures is governed by the nature of their boundaries. Formation of (001)-oriented MgO islands is promoted by the stability of their inherently nonpolar [100]-oriented edges. Conversely, the zigzag edges around (111) islands are more open and associated with an in-plane electrostatic dipole that renders them unfavorable at ideal vacuum conditions. Since edge dipoles are efficiently quenched by OH groups, hydroxylation via water from the rest gas may compensate for the edge polarity, producing the decisive stabilization effect of the MgO(111) islands on the Au(111) support. Our work highlights the largely unrecognized role of finite polar terminations, i.e., polar facets and edges, on the properties of spatially confined ionic systems.