We investigate the transmission performance of a polarization-insensitive self-homodyne detection receiver. The receiver uses a hybrid coherent and direct detection scheme, followed by digital signal processing (DSP) to rebuild the information signal and provide dispersion compensation. Performance is evaluated using quadrature phase-shift-keyed signals at 12.5-Gbaud produced with 500-kHz and 30-MHz linewidth lasers. Transmission distances up to 120 km are achieved with less than 1 dB penalty. We address the impact of polarization mode dispersion showing that the proposed DSP requires average differential group delay below 10% of the symbol period for less than 1 dB of Q-factor penalty.