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This chapter discusses extrinsic fiber optic sensors whose transduction mechanism depends on polarization modulation, through which the state of the sensed parameter can be encoded by the sensor as an intensity change, wavelength change, or both. Multimode polarization-modulating sensors have been demonstrated as hydrophones, accelerometers, pressure sensors, and rotary displacement sensors. One of the most important properties of a light beam is its state of polarization. The use of photoelasticity to determine stress distributions has a long history and is the basis of successful commercial enterprises. Fiber optic sensors based on the photoelastic effect all utilize the phenomenon of stress-induced birefringence, that is, relative retardation of two orthogonally polarized components of a light beam caused by stress or strain. There are two primary methods of encoding variable optical retardation produced in a fiber optic sensor: modulation of transmitted optical intensity or modulation of transmitted spectral distribution.