From the point of view of optic system limitation of fiber optic gyro, the phenomena of polarization interference which suffered from the fusion error of polarization maintaining fiber and unperfect optical element is studied. Also the effect of polarization interference on transmission spectra of light source and consequently on performance of the fiber optic gyro is discussed theoretically and experimentally. Under present technical condition, it is showed that the polarization interference does not affect the scale factor of fiber optic gyro. Although the polarization interference does not change the general coherent length of light source, it affects the interference characteristic of light source that there appear more than one fringes on the interference pattern. The additional interference fringes will shorten the short coherent length of wide band light source and benefit the fiber optic gyro. So it is improper not to describe the coherent characteristic of light source just by its coherent length.