In this study, erbium-doped fiber (EDF) and Panda-type polarization maintaining erbium-doped fiber (PM-EDF) were fabricated from the same erbium-doped preform. The intrinsic influence of stress induced by the Panda-type design on the optical properties was investigated. A local structural model of EDF was developed to simulate the introduction of stress by varying the length of non-bridging oxygen (NBO) bonds between erbium ions (Er3+) and the silica network, providing theoretical insights. An increase in bond length (indicative of tensile stress), results in decreased excitation and emission intensities for EDF, and the peaks exhibit redshifts. Conversely, a decrease in bond length (indicative of compressive stress), leads to increased excitation and emission intensities, with the peaks showing blueshifts. Experimentally, PM-EDF demonstrated a lower absorption coefficient compared to EDF, with absorption peaks experiencing redshifts of approximately 2 nm. Furthermore, the emission intensity was diminished, and the emission peak at 1530 nm displayed a redshift of around 3 nm. The fluorescence lifetime was shortened to 9.99 ms. Additionally, the total gain of PM-EDF decreased by approximately 4 dB, and the bandwidth narrowed by roughly 13%. The experimental outcomes largely align with the simulation predictions, further corroborating the significant impact of stress on the optical properties of PM-EDF.