1510s, "degree of measurement," from French grade "grade, degree" (16c.), from Latin gradus "a step, a pace, gait; a step climbed (on a ladder or stair);" figuratively "a step toward something, a degree of something rising by stages," from gradi (past participle gressus) "to walk, step, go," from PIE root *ghredh- "to walk, go." It replaced Middle English gree "a step, degree in a series," from Old French grei "step," from Latin gradus.
Meaning "inclination of a road or railroad" is from 1811. Meaning "class of things having the same quality or value" is from 1807; meaning "division of a school curriculum equivalent to one year" is from 1835; that of "letter-mark indicating assessment of a student's work" is from 1886 (earlier used of numerical grades). Grade A "top quality, fit for human consumption" (originally of milk) is from a U.S. system instituted in 1912. To figuratively make the grade "be successful" is from 1912; early examples do not make clear whether the literal grade in mind was one of elevation, quality, or scholarship.