A polarization independent (PI) interferometer design that can be built from standard optical components is described. Based upon a Michelson interferometer, the PI interferometer uses a 50/50 splitter and Faraday Rotator Mirrors (FM's). The interferometer achieves good optical characteristics, such as high extinction ratio (ER) and low insertion loss (IL). Lack of polarization sensitivity reduces interferometer construction tolerances and cost, enhances performance and utility, and expands the scope of interferometric based devices. Such characteristics can be used to construct flexible, high performance, polarization insensitive, multi-rate, self-calibrating, optical DPSK receivers, power combiners, optical filters and interleavers, all-optical switches, and cascaded interferometers. Since polarization is not maintained in standard fiber optic networks, a PI-DPSK receiver allows for use of more sensitive DPSK communications over fiber, without need for costly polarization control hardware. Other applications of PI interferometers include optical CDMA, secure communications, optical coherence tomography (OCT), and temporal gratings with ultra-precise timing.