http://en.wikipedia.org/wiki/Dude (thanks [info]pr0t)

There is no definitive origin of the word dude. The Compact Oxford Dictionary suggests it comes from a German dialect word meaning ‘fool’. The Random House Historical Dictionary of American Slang cites an 1877 reference in an unpublished private letter of the painter and sculptor known for Western themes, Frederick Remington: “Don’t send me any more women or any more dudes,” he told a correspondent who was sending him sketches. “Dude” first appeared in print in 1878. The word made the rounds of New York City slang of ca 1883, referring to a fastidiously sharp dresser, affecting sophistication. This is what the late 18th century British would have referred to as a “dandy”, which brings us to the compelling theory that “dude” was actually derived from the “Doodle” of the song “Yankee Doodle Dandy”.

Yankee Doodle went to town, A-riding on a pony.
Stuck a feather in his cap, and called it “macaroni”

Yankee Doodle keep it up, Yankee Doodle Dandy
Mind the music and the step, and with the girls be handy

The song was actually written by the British as an insult to the colonists during the French and indian war—the British soldiers have been decked out in their royal uniforms, and the colonists, or yankees, in rags and coonskin caps. So “Yankee Doodle Dandy” was a mocking take on colonial lack of sophistication. A “macaroni” was a British slang term for French or Italian attire, thus a man who had travelled to Paris or Rome, and adopted their style, affecting a high level of sophistication, was the definitive dandy. Yankee Doodle is so unsophisticated that he when sticks the feather in his cap and calls it “macaroni”, he believes he is being fashionable. The British popularized the song during the Revolutionary War, but the colonists in their victory eventually embraced the song as their own, showing pride in their lack of affected sophistication

Original link: http://funkatron.livejournal.com/129279.html