Highly polarized QSOs discovered in the Two-Micron All Sky Survey (2MASS) have been observed to determine the source(s) of optical polarization in this near-infrared color-selected sample. Broad emission lines are observed in the polarized flux spectra of most objects, and the polarization of the lines is at about the same level and position angle as the continuum. Generally, the continuum is bluer and the broad-line Balmer decrement is smaller in polarized light than for the spectrum of total flux. Narrow emission lines are much less polarized than the broad lines and continuum for all polarized objects. These properties favor scattering by material close to a partially obscured and reddened active nucleus, but exterior to the regions producing the broad-line emission, as the source of polarized flux in 2MASS QSOs. The largely unpolarized narrow-line features require that the electrons or dust polarizing the light be located at distances from the nucleus not much greater than the extent of the narrow emission-line region. In addition to known high-polarization objects, four 2MASS QSOs with AGN spectral types of 1.9 and 2 were observed to search for hidden broad emission-line regions. Broad lines were detected in polarized light for two of these objects, and the polarizing mechanism appears to be the same for these objects as for the highly polarized QSOs in the sample that readily show broad emission lines in their spectra. The observations also show that starlight from the host galaxy contributes a significant amount of optical flux, especially for the narrow-line objects, and support the suggestion that many 2MASS QSOs are measured to have low polarization simply because of dilution of the polarized AGN light by the host galaxy.
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