The Rockets are 4-0 since losing Yao Ming for the season with a stress fracture in his foot and have won 20 of their last 21 games, and own the longest winning streak in the NBA this season.
"This was a big win for us, we were trying to make history," McGrady said on the court as red confetti rained down.
The Rockets led by 17 at halftime, but two runs by Indiana in the third quarter got the Pacers within seven. Houston scored 11 of the last 13 points of the quarter to stretch the lead to 16 and the Pacers wouldn't threaten again.
It is Houston's seventh straight win by 10 points or more, which extends a franchise record.
All but two of McGrady's points came in the first half and he had six rebounds and five assists. Rafer Alston added 21 points and had seven assists for the Rockets.
Houston used an 14-4 run in the first half of the fourth quarter to stretch its lead to 108-82 and send scores of fans streaming for the exits. That run included a one-handed dunk by Carl Landry that brought the crowd to its feet and ended with a long 3-pointer by Bobby Jackson.
Both teams played mostly backups after that.
Among the fans that stayed, several held signs, including one that said "Sweet 16, Go Rockets" with the 16 made out of glittering dark pink numbers.
Another sign read "Mavs, Here We Come." The Rockets face the Mavericks in Dallas Thursday before hosting New Orleans Saturday.
Houston's last 15-game winning streak was in the Rockets championship season of 1993-94.
The Pacers outscored Houston 15-6 in the opening minutes of the third quarter to cut the lead to 72-64. Indiana got a pair of 3-pointers from Danny Granger and one from Travis Diener in that span to fuel the run.
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Granger and Troy Murphy had 17 points apiece to lead Indiana. Murphy also had 10 rebounds.
A layup by Luis Scola later in the third quarter pushed Houston's lead to 79-66. Indiana went on a 10-4 run, capped by a 3-pointer by Mike Dunleavy, to cut the lead to 83-76 with about three minutes left in the third quarter.
Houston finished the quarter by outscoring Indiana 11-2 to enter the fourth quarter with a 94-78 lead.
The Rockets scored 15 straight points to break a tie and take a 51-36 lead midway through the second quarter. Luther Head made a pair of 3-pointers in the run. The Pacers had three turnovers and a bevy of missed shots in the more than three minute scoring drought.
It was 51-40 when Houston went on a 15-3 run, fueled by three 3-pointers by McGrady, to push its lead to 66-43 about a minute before halftime. Indiana scored the last six points of the half to leave Houston ahead 66-49 at halftime. It was a season high for first-half points for the Rockets.
Notes: Houston's Chuck Hayes had a season-high nine points with 11 rebounds. ... Wednesday was the first time McGrady had scored more than 20 points in the first half since November.
[Associated Press; By KRISTIE RIEKEN]
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