In this paper, the physical nature of the radiochannel is considered by using an L-path channel model to developing an algorithm for OFDM systems operating in fast time-varying vehicular environment. Assuming the Time of Arrival (TOA) is known, a novel iterative pilot-aided algorithm for joint estimation of multi-path Rayleigh channel complex gains and Carrier Frequency Offset (CFO) is introduced. Each complex gain time-variation, within one OFDM symbol, is approximated by a Basis Expansion Model (BEM) representation. An autoregressive (AR) model is built for the parameters to be estimated (the AR model for the BEM coefficients is based on the Jakes process). The algorithm performs recursive estimation using Extended Kalman Filtering. Hence, the channel matrix is easily computed, and the data symbol is estimated with free intersub- carrier-interference (ICI) when the channel matrix is QR-decomposed. It is shown that only one iteration is sufficient to achieve the performance of the ideal case where knowledge of channel response and CFO is available.