The use of spin-labelling to study the dynamics of He (2 \sp3S) metastable atom ionization of atoms and simple molecules is described. Briefly, He (2 \sp3S) atoms created by a microwave discharge are spin-polarized in a flowing afterglow via optical pumping with circularly-polarized 1.08 μm (2 \sp3S) ⇒ (2 \sp3P) radiation from an LNA laser. A target gas is injected into the flowtube, and electrons created in Penning ionization reactions diffuse through a differentially-pumped aperture and are energy- and spin-analyzed with a hemispherical energy analyzer in series with a retarding-potential Mott polarimeter. Data are reported for Ar, CO\sb2, CO, H\sb2O, O\sb2, NO, NO\sb2, SO\sb2, and Cl\sb2 target gases. The generally accepted model of Penning ionization, the so-called exchange model, suggests that a target electron of appropriate spin tunnels to fill the He 1s hole with simultaneous ejection of the He 2s electron, which, for polarized He (2 \sp3S) atoms, produces fully polarized electrons. It is found that fully polarized electrons are ejected in reactions with closed-shell, negative electron affinity targets such as Ar and CO\sb2, independent of the positive ion final state, in agreement with the exchange model. Substantially lower polarization is measured for open-shell targets, such as O\sb2 and NO, and for targets with large electron affinity, such as NO\sb2 and SO\sb2. A strongly attractive entrance channel potential is possible in these cases. The exact depolarization mechanism is unclear, but is probably related to the formation of the ionic quasi-molecule. For some targets (Cl\sb2, for instance), excitation transfer with subsequent autoionization of the core-excited Rydberg target state created occurs, and these reactions also produce electrons with reduced polarization.