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An improved high-spectral-efficiency coding-rotated modulation (CRM)-iterative demodulation/decoding (ID) scheme in the orthogonal frequency division multiplexing (OFDM) system is proposed. For the rotated QAM, it unveils the optimum rotation matrix depending on the modulation order, the code rate and the receiver scheme (ID or non-ID). The suboptimal solution of the rotation angle is proposed, and a novel two-dimensional time/frequency component interleaver is also put forward to make the best use of the modulation diversity, time diversity and frequency diversity. Besides, code-matched four-dimensional QAM rotation matrices and the corresponding time/frequency component interleaver are proposed to improve the error performance furthermore. The analysis of extrinsic information transfer chart (EXIT) chart is also given to explain the convergence characteristic. Simulation results have turned out that this new scheme can significantly outperform the conventional BICM scheme.