Polarization insensitive wavelength conversion of a 40 Gb/s non-return-to-zero (NRZ) differential phase-shift keying (DPSK) data signal is demonstrated using four-wave mixing (FWM) in a silicon nanowire circuit. Polarization independence is achieved using a diversity circuit based on polarization rotators and splitters, which is fabricated by a simple process on the silicon-on-insulator (SOI) platform. Error-free performance is achieved with only 0.5 dB of power penalty compared to the wavelength conversion of a signal with well optimized input polarization. Additionally, data transmission over 161 km standard single-mode fiber (SSMF) is demonstrated at 40 Gb/s using optical phase conjugation (OPC) in the proposed circuit.