Let $\Phi$ be an algebraically closed field of characteristic zero,
$G$ a finite, not necessarily abelian, group. Given a $G$-grading on
the full matrix algebra $A = M_n(\Phi)$, we decompose $A$ as the
tensor product of graded subalgebras $A = B\otimes C$, $B\cong M_p
(\Phi)$ being a graded division algebra, while the grading of $C\cong
M_q (\Phi)$ is determined by that of the vector space $\Phi^n$. Now
the grading of $A$ is recovered from those of $A$ and $B$ using a
canonical ``induction'' procedure.