We present an experimental and theoretical study of the phenomenon of edge birefringence that appears near boundaries of transparent objects which are observed with high extinction and high resolution polarized light microscopy. As test objects, thin flakes of isotropic KCl crystals were immersed in media of various refractive indices. The measured retardation near crystal edges increased linearly with both the crystal thickness (tested between 0.3 and 1 micron), and the difference in refractive indices n between crystal (n = 1.49) and immersion liquids (n between 1.36 and 1.62). The specific edge birefringence, i.e., the retardation per thickness and per refractive index difference, is 0.029 on the high refractive index side of the boundary and -0.015 on the low refractive index side. The transition through zero birefringence specifies the position of a boundary at a much higher precision than predicted by the diffraction limit of the optical setup. The theoretical study employs a ray tracing procedure modeling the change in phase and polarization of rays passing through the specimen. We find good agreement between the model calculations and the experimental results indicating that edge birefringence can be attributed to the change in polarization of light that is refracted and reflected by dielectric interfaces.