Abstract: Polarization mode dispersion (PMD) in optical fiber is one of the important factors that restrict high-speed and long-distance transmission of optical fiber. In the paper, interferometry was used to analyze and test the PMD in optical fiber. Different from the common frequency domain test method, interference phenomenon was used in the time domain to detect propagation time difference between two different polarization modes. A new fringe envelope extraction method was used to improve the stability of test results, and the range error was less than 0.02 ps. The test system could measure two types of optical fibers with modeless coupling and random mode coupling. Measurement time was only the time required to move interferometer arm, which was convenient for on-site measurement. As a result, the test system has high measurement speed and stability.