In the playoffs, the Pacers defeated the Milwaukee Bucks in five games in the first round, and the Philadelphia 76ers in six games in the semifinals before preceding to defeat their arch-rivals, the New York Knicks in a tough, hard fought six game series in the Eastern Conference Finals en route to advancing to the NBA Finals for the first time in franchise history. However, the Pacers would lose in the Finals to the Los Angeles Lakers in six games.
Following the season, Larry Bird resigned as head coach, Davis was traded to the Porland Trail Blazers, Chris Mullin was released and later re-signed as a free agent with the Golden State Warriors, Mark Jackson signed with the Toronto Raptors, and Rik Smits retired after playing 12 years in the NBA with the Pacers.
The Pacers began a new era by moving into Conseco Fieldhouse after 25 years at Market Square Arena. They would start the season with a 7-7 record but finished with a 56-26 record, good enough to win their 2nd straight division title. The Pacers even won 25 straight games at their new arena.
In the first round of the playoffs, the top-seeded Pacers went to five games against the Milwaukee Bucks. In the second round, the Pacers would beat the Philadelphia 76ers in 6 games. This would lead to a rematch with the New York Knicks in the Eastern Conference Finals. The Pacers took Game 5 at home to take a 3-2 series lead. The Pacers would clinch the series in 6 games as Reggie Miller scored 34 points. The Pacers reached the NBA Finals but found themselves outmatched by a Los Angeles Lakers team that had Kobe Bryant and Shaquille O’Neal. The Lakers won the NBA Finals in 6 games. Following the season, Head Coach Larry Bird would step down, citing the daily grind of coaching.