The early fault diagnosis of rolling bearings has always been a difficult problem due to the interference of strong noise. This paper proposes a new method of early fault diagnosis for rolling bearings with entropy participation. First, a new signal decomposition method is proposed in this paper: intrinsic time-scale decomposition based on time-varying filtering. It is introduced into the framework of complete ensemble intrinsic time-scale decomposition with adaptive noise (CEITDAN). Compared with traditional intrinsic time-scale decomposition, intrinsic time-scale decomposition based on time-varying filtering can improve frequency-separation performance. It has strong robustness in the presence of noise interference. However, decomposition parameters (the bandwidth threshold and B-spline order) have significant impacts on the decomposition results of this method, and they need to be artificially set. Aiming to address this problem, this paper proposes rolling-bearing fault diagnosis optimization based on an improved coyote optimization algorithm (COA). First, the minimal generalized refined composite multiscale sample entropy parameter was used as the objective function. Through the improved COA algorithm, optimal intrinsic time-scale decomposition parameters based on time-varying filtering that match the input signal are obtained. By analyzing generalized refined composite multiscale sample entropy (GRCMSE), whether the mode component is dominated by the fault signal is determined. The signal is reconstructed and decomposed again. Finally, the mode component with the highest energy in the central frequency band is selected for envelope spectrum variation for fault diagnosis. Lastly, simulated and experimental signals were used to verify the effectiveness of the proposed method.