We analyze the effect of polarization-dependent loss (PDL) on the performance of the polarization-division-multiplexed (PDM) signals in direct-detection systems. We present the theoretical analysis of the sensitivity penalty caused by PDL-induced coherent crosstalk and compare the results with experimental data obtained by using a simple variable PDL emulator based on a LiNbO(3) Mach-Zehnder modulator. Also presented is the performance degradation caused by the polarization misalignment between the received signals and the polarization beam splitter at the receiver in the presence of PDL. (C) 2008 Optical Society of America