Demar Derozan came back from a disappointing game against the Bulls the night before to lead the Raptors with 26 points and 9 rebounds.
Terrence Ross pitched in 18 points, while Kyle Lowry added 13, and came away with a season-high 14 assists.
The victory brings their overall record to 15-15, and the Toronto Raptors are now one of only four teams with a .500 record or better in the East.
In the marquee match-up, Jonas Valanciunas and Roy Hibbert battled in the paint. Hibbert was afflicted with foul trouble, and was only able to log 21 minutes in the loss.
His 16 points led the Pacers, but he was only able to corral 3 rebounds, a key factor in the Raptors win.
Valanciunas was solid once again, tallying 13 points and adding 9 rebounds, 3 assists, a steal and a block in 31 minutes.
Indiana’s Paul George had one of his worst games of the year as he only had 12 points to go along with 8 rebounds. He also tied his season-high with 6 turnovers.
After the win, the Toronto Raptors have a day off before travelling to Washington on Friday.
Notes: Since the Rudy Gay trade, the Raptors are 9-3. The Pacers had their 5-game winning streak snapped.