The move comes after the Pacers had reworked the final year of McMillan’s contract for 2020-21 and added a team option for 2021-22 in the form of a soft extension earlier this month.
Houston Rockets coach Mike D’Antoni, who is in the final year of his contract, will be an Indiana target should he become available, sources tell ESPN’s Adrian Wojnarowski.
Indiana also plans to search from a pool of candidates they would consider “program builders” over the long term, sources tell Wojnarowski.
In four seasons as the Pacers’ coach, McMillan had a 183-136 record, including 3-16 in the postseason. Indiana was swept in the first round in each of the past two seasons.
The Pacers haven’t reached the second round since appearing in the Eastern Conference finals in 2013 and 2014, and after Monday’s loss to Miami, Indiana has lost a franchise-record nine consecutive playoff games.
Injuries have played a key role in the failures. The Pacers played last season without two-time All-Star Victor Oladipo, who suffered a knee injury, and without All-Star forward Domantas Sabonis against the Heat because of a foot injury.
“On behalf of the Simon family and the Pacers organization, I’d like to thank Nate for his years with the team,” Pacers president of basketball operations Kevin Pritchard said in a statement. “This was a very hard decision for us to make; but we feel it’s in the best interest of the organization to move in a different direction. Nate and I have been through the good times and the bad times; and it was an honor to work with him for those 11 years (in Indiana and Portland).”
McMillan has a 661-588 career record in 16 seasons as a head coach for Seattle, Portland and Indiana.
The Associated Press contributed to this report.