A generalized Mueller matrix method (GMMM) is proposed to measure the polarization mode dispersion (PMD) in an optical fiber system with polarization-dependent loss or gain (PDL/G). This algorithm is based on the polar decomposition of a 4 4 x matrix which corresponds to a Lorentz transformation. Compared to the generalized Poincare sphere method, the GMMM can measure PMD accurately with a relatively larger frequency step, and the obtained PMD data has very low noise level. (c) 2006 Optical Society of America.