Madara XIII said:
Wasn't The Fisherman's Wife the basis of all tentacle hentai?
I remember watching an Anime Special on HBO and then BOOM they hit me with Tentacles. LIKE WTF!!! I want to see the history of anime not where Tentacle porn started!
You are
partly correct.
Although "The Dream of the Fisherman's Wife" can arguably be described as the earliest account of tentacle-erotica, it was not the sole reason behind the advent of tentacle-hentai in the 90's.
The most contributing factor by all accounts was Japan's censoring laws which forbid the depiction of genitals even in media which was solely intended for such purposes (i.e. Hentai and Adult-Videos)
Thus, from such constraints artists were inspired to depict sexual acts involving Tentacles, which did not fall under the aforementioned censorship law.
However, most of those depictions featured tentacle-monsters, and NOT actual Octopi
For more information on the subject, follow this Link: http://en.wikipedia.org/wiki/Tentacle_erotica#Culture