If a surface-modulated diffraction grating is arranged so that the scattering vector does not lie in the plane of incidence of the illuminating radiation, then polarization conversion can occur. This conversion can be strongly enhanced if a surface mode, such as a surface-plasmon-polariton or guided mode, is excited at the grating surface. In this paper we develop a mathematical description of the polarization conversion process, using a method that transforms the grating surface into a planar system. The predicted polarization conversion is compared very favorably with data for surface-mode-enhanced conversion.