Polarization-Sensitive Optical Coherence Tomography (PS-OCT) has been used to measure birefringence of biological samples, namely the retinal nerve fiber layer (RNFL). The presence of blood vessels in biological samples complicates accurate measurement of tissue birefringence as a result of the Doppler shift in fringe frequency and the shadowing effect below blood vessels due to absorption and scattering of light photons by blood. Thus the necessity arises to investigate phase retardation measurement with controlled capillary blood flow above a birefringent sample with PS-OCT. The effect of blood flow on the calculation of phase retardation and tissue birefringence will be studied in the polarization domain. This paper will describe the PS-OCT system, signal processing, and phase retardation calculation algorithms. Phase retardation measurement will be studied at different blood flow rates and a range of incident angles on the sample. The effect of light scattering and differential Doppler shifts between the polarization modes on the measurement of phase retardation will be presented