In this contribution, the concepts of polarization modulation (PM) and spatial modulation (SM) are integrated, to reap their respective advantages toward single-radio frequency (RF) multiple-input multiple-output (MIMO) transmissions. In the so-called polarization and spatial modulation (PSM) system, the information is conveyed by activated antenna indices as well as polarization modulated symbols, while at the receiver, a low-complexity near-optimal detection algorithm based on compressive sensing (CS) is proposed. Furthermore, a closed-form union bound of the average bit-error rate (BER) over fading channels is quantified by theoretical derivation, which is then extended to the case of spatial correlation (SC) as well as channel estimation error (CSE) toward practical use. Finally, our simulation results demonstrate the superiority of the developed PSM system over conventional PM in terms of BER performance over various fading channels.