Abstract 5th generation (5G) of wireless networking is coming with diverse use cases, such as enhanced-Mobile BroadBand (eMBB), Ultra Reliable and Low Latency Communications (URLLC), and massive Machine Type Communications (mMTC). As a result, 5G wireless networks require flexible physical layer solutions through new radio access technologies (RATs). At this point, orthogonal frequency division multiplexing with index modulation (OFDM-IM) appears a flexible solution to satisfy the diverse user demands. Considering the strict requirements of mMTC services, such as low throughput, low power consumption, and low cost design, we propose fading-aligned OFDM-IM for more spectrum- and energy-efficient communication. In the proposed method, inactive subcarriers in OFDM-IM are cleverly utilized to avoid deep fading sub-channels, because the deep fading of the active subcarriers decreases bit error rate (BER) performance significantly. Computer simulation results demonstrate that more than 10 dB gain is obtained for a reference BER value of 1 0 − 4 at the same spectral efficiency with conventional OFDM. Moreover, the proposed method is compared with convolutional coded (CC) OFDM at the same spectral efficiency, and it is shown that the proposed scheme performs better in terms of BER performance. Furthermore, theoretical error performance of the proposed method is investigated to support our computer simulations.