This tutorial-review introduces the fundamentals of polarized light interaction with biological tissues and presents some of the recent key polarization optical methods that have made possible the quantitative studies essential for biomedical diagnostics. Tissue structures and the corresponding models showing linear and circular birefringence, dichroism, and chirality are analyzed. As the basis for a quantitative description of the interaction of polarized light with tissues, the theory of polarization transfer in a random medium is used. This theory employs the modified transfer equation for Stokes parameters to predict the polarization properties of single- and multiple-scattered optical fields. The near-order of scatterers in tissues is accounted for to provide an adequate description of tissue polarization properties. Biomedical diagnostic techniques based on polarized light detection, including polarization imaging and spectroscopy, amplitude and intensity light scattering matrix measurements, and polarization-sensitive optical coherence tomography are described. Examples of biomedical applications of these techniques for early diagnostics of cataracts, detection of precancer, and prediction of skin disease are presented. The substantial reduction of light scattering multiplicity at tissue optical clearing that leads to a lesser influence of scattering on the measured intrinsic polarization properties of the tissue and allows for more precise quantification of these properties is demonstrated.