Orlando's Dwight Howard had 21 points and 20 rebounds, but made just five of 12 free throws, including 4-of-8 in the fourth quarter. Hedo Turkoglu had 20 points and 11 assists and J.J. Redick tied a season high with 17 points.
It was Orlando's second game without All-Star point guard Jameer Nelson, who's out for the season with a dislocated right shoulder.
Indiana made 28 of 31 free throws, while Orlando shot just 21-of-33. The Magic also made just 11 of 32 3-pointers.
After Indiana shot 52 percent in the first half to lead 61-51 at the break, Orlando opened the second half on a 10-2 run.
A 3-pointer by Rashard Lewis trimmed Indiana's lead to 63-61 and forced the Pacers to call a timeout. Turkoglu tied it at 63 on a layup, but the Pacers bounced back with a 17-2 run, including nine points by Murphy and six points by Ford, to take an 80-65 lead with three minutes left in the third quarter.
Orlando closed the quarter on a 9-0 run. A 3-pointer by Redick with 1.5 seconds left made it 80-74 at the end of the period.
Turkoglu tied it at 87 on two free throws with 8:20 to go.
Indiana led 102-99 in the final minute, and Orlando had a chance to tie before Redick elbowed Indiana's Mike Dunleavy and was called for an offensive foul with 38.7 seconds left.
Ford dribbled at the top of the key to run the shot clock down, then drove and drew a foul from Orlando's Courtney Lee with 19 seconds left. Ford missed the first free throw, then made the second to make it 103-99.
Turkoglu missed a 3-pointer, and the Dunleavy made two free throws at the other end with 12.4 seconds to play.
Lewis made a 3-pointer with 7.7 seconds left, then the Magic fouled Granger with 7.1 seconds left. Granger made both free throws to end Orlando's threat.
