The integrated reflective semiconductor optical amplifier (RSOA) and electro-absorption modulator (EAM) is viewed as an appealing solution to the colorless transmitter on the optical network unit (ONU) side of wavelength-division multiplexed (WDM) passive optical networks (PONs), for its broad modulation bandwidth and high optical gain. However, the conventional RSOA–EAM usually exhibits a poor upstream signal eye-diagram because it can hardly simultaneously saturate the downstream signal and boost the upstream signal as required. By exploiting the polarization-depended RSOA gain, we propose a polarization-discriminated RSOA–EAM to improve the quality of the upstream signal eye-diagram. In this device, the transverse electric polarized downstream signal is saturated by the high gain in the RSOA active region made of compressively strained multiple quantum wells, whereas the upstream signal is linearly amplified after polarization rotation. We find that, as the quality of the upstream signal eye-diagram improves with an increased polarization rotation angle, its power drops, which indicates that there exists an optimized rotation angle to reach a compromise between the upstream signal integrity and power. Simulation results show that the dynamic extinction ratio and output power of the upstream signal can reach 8.3 dB and 11 dBm, respectively, through the proposed device with its rotation angle set at an optimum value (80°), which exceeds the specification (6 dB and 4 dBm) of the upstream transmitter as required by the next-generation PON stage two. The quality of the upstream signal eye-diagram measured in Q-factor is improved by 10 dB compared to the conventional RSOA–EAM design without polarization rotation introduced.