A vehicular driver monitoring system includes a vehicular interior rearview mirror assembly having a mirror head that accommodates a variable reflectance mirror reflective element. A camera is accommodated by the mirror head and views through the variable reflectance mirror reflective element. A light emitter is accommodated by the mirror head and is electrically operable to emit near infrared (NIR) light that passes through the mirror reflective element. Responsive to detection of glare light at the variable reflectance mirror reflective element, the vehicular driver monitoring system electrically reduces the reflectance of the variable reflectance mirror reflective element. Responsive to determining presence of a passenger, the vehicular driver monitoring system limits electrical reduction of the reflectance of the variable reflectance mirror reflective element so that the variable reflectance mirror reflective element provides at least a first minimum threshold transmission level of NIR light passing through the variable reflectance mirror reflective element.