"In the 1920s, Funakoshi adopted the Kyū/Dan rank system and the uniform (keikogi) developed by Kano Jigoro, the founder of judo. This system uses colored belts (obi) to indicate rank. Originally, karate had only three belt colors: white, brown, and black (with ranks within each). The original belt system, still used by Shotokan Karate of America, is:
* Ungraded: White
* 8th kyū–4th kyū: white
* 3rd kyū–1st kyū: brown
* Dan grades: black
Funakoshi awarded the first 1st dan (初段; shodan) Shotokan karate ranks to Tokuda, Otsuka, Akiba, Shimizu, Hirose, Gima, and Kasuya on 10 April 1924.
Hong Hi Choi, a key figure in the development of taekwondo, studied Shotokan karate during the Japanese occupation of Korea during the first half of the 20th century."
Taken from Wikipedia.com
http://en.wikipedia.org/wiki/ShotokanI just have to add that other belt colors have been added to the ranks in some systems. In Shotokan, I've seen:
8th kyu - yellow
7th kyu - orange
6th kyu - green
5th kyu - purple
4th kyu - purple
3rd kyu - brown
2nd kyu - brown
1st kyu - brown
There are other variations of colors.
So the rank system came in before WW2, Bluecrab, but, you are right, it was inspired by Judo.
I do believe that it is a 10 kyu/ 10 Dan system, but that the 10th, and 9th kyu are reserved for youth, and the 10th Dan is known as the Death belt because usually the Karate ka is of advanced age when he/she would receive this honor.