The Indiana Pacers and forward Aaron Nesmith agreed to a two-year, $40.4 million contract extension Monday night, league sources confirmed to The Athletic. Nesmith and the Pacers had until midnight to agree on a veteran contract extension before the NBA’s deadline. The 26-year-old is now under contract through the 2028-29 season.
“We value what he does as a player but also who he is as a person,” Pacers general manager Chad Buchanan said of Nesmith last month in his annual pre-training camp news conference. “He’s been a great fit with our team, and (we) would love to keep him here.”
Nesmith inked a three-year, $33 million rookie contract extension with the Pacers in October 2023. He is in the second year of that deal, and his new contract extension will kick in during the 2027-28 campaign. The additional $40.4 million Nesmith is set to make is the most lucrative two-year contract extension he could agree to under his current contract. The Pacers and Nesmith could have agreed to a full three-year contract extension, but they opted not to, per league sources. Nesmith also can’t be traded for the next six months.
Indiana initially acquired Nesmith in a trade with the Boston Celtics in July 2022. Nesmith, whom the Celtics drafted 14th in 2020, struggled to find a role in Boston’s already championship-caliber rotation when he entered the NBA. But since joining the Pacers, he’s emerged as one of the NBA’s top two-way players. Nesmith has increased his 3-point percentage in each of his three seasons in Indiana, and he’s also routinely drawn the assignment of guarding the other team’s top perimeter players.
Nesmith was a vital part of the Pacers’ first run to the NBA Finals in 25 years, where they lost in seven games against the Oklahoma City Thunder. He started all 23 playoff games and shot 49.2 percent from behind the arc. Nesmith’s performance against the New York Knicks in Game 1 of the Eastern Conference finals will be remembered as one of the greatest performances in Pacers playoff history. He scored a playoff career-high 30 points and drilled a Pacers postseason franchise-record eight 3-pointers, including six in the fourth quarter to help force overtime and ultimately steal a victory at Madison Square Garden.
Nesmith was limited to a career-low 45 regular-season games last year, with the bulk of his absence stemming from an ankle injury that sidelined him for 35 games. However, he averaged 12 points and four rebounds, while shooting 50.7 percent from the field, 43.1 percent on 3-pointers and 91.3 percent at the free-throw line, which were all career highs.
Monday was also the last day the Pacers and guard Bennedict Mathurin could agree to a rookie contact extension, but the two sides did not come to terms. Mathurin, whom the Pacers drafted sixth in 2022, is entering the final season of his four-year, $29.9 million rookie deal. He averaged 16.1 points and 5.3 rebounds last year and is slated to become a restricted free agent next offseason.
The Pacers open the 2025-26 season Thursday at home against the Thunder. Indiana will be without star guard Tyrese Haliburton all year due to a torn right Achilles he suffered in Game 7 of the NBA Finals.