The accurate prediction of electronic response properties of extended molecular systems has been a challenge for conventional, explicit density functionals. We demonstrate that a self-interaction correction implemented rigorously within Kohn-Sham theory via the Optimized Effective Potential (OEP) yields polarizabilities close to the ones from highly accurate wavefunction-based calculations and exceeding the quality of exact-exchange-OEP. The orbital structure obtained with the OEP-SIC functional and approximations to it are discussed.PACS numbers: 31.15. Ew,71.15.Mb,72.80.Le Gaining microscopic insight into the quantummechanical electronic effects that govern energy-and charge transfer in processes like light-harvesting, chargeseparation in organic solar cells, or the response of molecular opto-electronic devices would be extremely beneficial to the understanding of these phenomena. But the computational complexity of solving the manyelectron Schrödinger equation leaves little hope that wave-function based approaches can address these problems any time soon. The formulation of quantum mechanics without wavefunction, i.e., density functional theory (DFT) in the Kohn-Sham framework, is computationally much more efficient and allows to handle systems with up to several hundreds of electrons. Therefore, it appears as the ideal tool for investigating the above mentioned problems. However, the predictive power of DFT calculations depends crucially on the approximations made in the description of the exchange-correlation effects. Structural, ground-state molecular properties are obtained with reasonable to excellent accuracy using standard, explicit density functionals like the Local Spin Density Approximation (LSDA) or Generalized Gradient Approximations (GGAs). But these functionals notoriously fail in the description of charge transfer processes [1, 2] and associated problems like predicting the response [3] or transport [4] properties of extended molecular systems. There is, thus, a serious need for exchange-correlation approximations that allow to calculate response properties like polarizabilities of extended systems reliably on a quantitative scale and with bearable computational costs.It has been demonstrated that improvements in the density-functional description of the response of conjugated polymers can be achieved based on current density functional theory [5] and related ideas [6], or by incorporating full [3,7,8] or partial [9] exact exchange. It has also been argued that correlation effects play a non-negligible role in the proper description of response properties [10]. However, evaluating the Fock integrals in exact exchange approaches increases numerical costs substantially, and the computational complexity of approaches using exact exchange with "compatible" correlation is significant [11].In this manuscript we demonstrate that these problems can be overcome with a self-interaction correction (SIC) employed rigorously within Kohn-Sham theory. In the SIC-scheme, only direct, i.e., self-exchange int...