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We present the principle, implementation, and performance of a recently introduced high-sensitivity modulation format based on the combined use of polarization-division-multiplexed quadrature phase-shift keying (PDM-QPSK, or PQ) and m-ary pulse-position modulation (m-PPM). This novel modulation format, termed PQ-mPPM, offers high receiver sensitivity in optically preamplified receivers. We study the sensitivity of the PQ-mPPM format both analytically and experimentally, and compare it to common modulation formats such as PDM-QPSK, m-PPM, differential phase-shift keying, and polarization-switched QPSK. The bandwidth expansion factor of this format is also discussed. A record sensitivity of 3.5 photons per bit at BER = 10-3 is experimentally demonstrated at 2.5 Gb/s with a novel pilot-assisted digital coherent-detection scheme, outperforming PDM-QPSK by about 3 dB.