The birefringence of transmission flat/sphere and other components introduces measurement error in Polarization Phase Shifting Interferometry (PPSI). Based on the principle of PPSI, the measurement error was analyzed by using the Jonse maxtrix formulations. It was found that the birefringence generated eight beams interference on the CCD, and the measurement error was a function of the ratio of amplitude of test beam and reference beam, the testing cavity phase, the amount and orientation of birefringence. The measurement error varied 2 periods in every fringe. The maximal PV of measurement error would be 4 times of birefringence and the measurement error would be compressed if the orientation of birefringence was consistent. When the birefringence was of the same orientation, the measurement error could be eliminated. A 12 inches material was analyzed. The results show that the birefringence of the 4 inches area in the center was 18 nm, which introduced the measurement error of 72 nm (PV). The birefringence of the material at the edge was 22 nm and the measurement error was 24.9 nm (PV) because of the consistence of birefringence orientation.