Abstract Orthogonal frequency division multiplexing (OFDM) with index modulation (OFDM-IM), which has been recently proposed as an alternative waveform to classical OFDM, generally achieves lower bit error rate compared to classical OFDM because it is more robust to bit errors by encoding the information in the location of the active subcarriers instead of only modulating the subcarriers. In this paper, we propose a higher-performance OFDM-IM scheme. The proposed system is more reliable than OFDM-IM, particularly for channels that have deep fading. The proposed system uses generalized prefix (GP) as a guard interval and this GP provides additional degrees of freedom, which can be optimized. Comprehensive computer simulation results are included to demonstrate the significant performance improvement for different channel models, such as deep Rayleigh fading and realistic channels with high mobility.