Orthogonal signal-division multiplexing (OSDM) has recently emerged as a promising alternative to orthogonal frequency division multiplexing (OFDM) for high-rate wireless communications. Although providing more flexibility in system design, it suffers from a special interference structure, namely inter-vector interference (IVI), when channel time variations are present. In this paper, we first derive the general OSDM signal model over time-varying channels, and then show that a time-domain window can be used to enhance the diagonal-block-banded (DBB) approximation of the channel matrix in a transformed domain. Furthermore, based on the DBB matrix enhancement, a low-complexity OSDM equalization algorithm is designed. Simulation results indicate that the proposed equalizer has significant performance advantages over that using the direct DBB approximation.