An improved optical attenuator minimizes polarization mode dispersion in optical signals carried by optical fiber systems. The optical signals are expanded and refocussed by GRIN lenses, and the attenuator makes use of a liquid crystal cell disposed between birefringent polarizers for polarization-independent attenuation or switching. A birefringent plate compensates for dispersion of the ordinary and extra-ordinary rays within the attenuator. The plate will often be disposed at an oblique angle to minimize walk-off between these rays.