Can I use Java to develop an API?

In general terms, yes you can I've personally found Java to be an excellent language for developing protocols.
Specifically regarding a protocol for accessing MS SQL are you talking about building a specific protocol on top of JDBC or something different?

Yes using JDBC, but how does the other language able to call the Java API.

Missed the 'any language' bit when I first read your question.
Not sure how you could implement a protocol in ANY language that would allow any language to use it.
There are certainly ways using JNI to allow other languages to use your Java implementation of the protocol, but you would have to implement the interface for each individual language. As would be the case if you implemented your API in C, or VB, or perl, or whatever.

Another thing you could do would be to proviude a command line interface to you protocol implementation, or a simple socket interface. Then other languages could simply call your Java implementation as if it was another application.

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