Orthogonal signal division multiplexing (OSDM) is an emerging technology for signal modulation. It is a method to ease the contradiction between subcarrier flexibility and PAPR. Particularly, it can be viewed as a bridge between single-carrier and orthogonal frequency division multiplexing (OFDM) from frequency domain. In this paper, OSDM method is adopted in underwater acoustic (UWA) communication system. Meanwhile, in order to solve the influence of underwater acoustic channel which has large time delay, strong multipath and Doppler characters, a data frame structure with PN sequence is designed. PN sequence is used to do channel decision feedback equalization (DFE) and Doppler estimation. Finally, the proposed system is verified by simulation. When the length of the OSDM vector is bigger than the channel length, the BER of OSDM system is lower than OFDM system. The simulation results show that PN sequence based OSDM system proposed in this paper has capability to resist multipath and Doppler and good performance to overcome underwater acoustic channel.