Quantum systems such as, for example, photons, atoms, or Bose-Einstein condensates, prepared in complex states where entanglement between distinct degrees of freedom is present, may display several intriguing features. In this Letter we introduce the concept of such complex quantum states for intense beams of light by exploiting the properties of cylindrically polarized modes. We show that already in a classical picture the spatial and polarization field variables of these modes cannot be factorized. Theoretically it is proven that by quadrature squeezing cylindrically polarized modes one generates entanglement between these two different degrees of freedom. Experimentally we demonstrate amplitude squeezing of an azimuthally polarized mode by exploiting the nonlinear Kerr effect in a specially tailored photonic crystal fiber. These results display that such novel continuous-variable entangled systems can, in principle, be realized.© 2011 American Physical Society.