The polarization extinction ratio (PER) of the multifunction integrated optic circuit (MIOC) is significant in maintaining polarization reciprocity in the fiber-optic gyroscope (FOG), and a high PER value is required, particularly in high-precision FOGs. Practically, the value of the PER decreases owing to the recoupling of the TM mode to the output port, thereby degrading the performance of the FOG. To improve the PER, the propagation of the leaking TM mode in the substrate is analyzed first. The variation of the PER with the chip structure is simulated based on the overlap integral algorithm of the optical mode. According to the analysis results, a structure of double absorption trenches at the bottom of the MIOC is proposed to block the TM mode from reflecting to the output port. In comparison with the traditional design, the optimized MIOC exhibits a higher PER that increases by approximately 25 dB and the average value of the PER reaches 75 dB. The MIOC design proposed in this study has good potential for application in high-precision FOGs.