Aaron Nesmith was a key part of the Indiana Pacers’ run to the NBA Finals last season, and the team is rewarding him accordingly heading into the 2025-26 campaign.

ESPN’s Shams Charania reported Monday that Indiana agreed to a two-year, $40.4 million extension with the forward that keeps him with the team through the 2028-29 season. The deal includes a trade kicker and features the maximum amount of salary that was allowed with the extension.

ESPN’s Bobby Marks added more context:

Indiana acquired Nesmith via trade from the Boston Celtics ahead of the 2022-23 season, and he immediately played his way into the rotation after he was nothing more than a secondary contributor during his first two years in the league.

Across three seasons with the Pacers, he has averaged 11.3 points and 3.8 rebounds per game while shooting 47.3 percent from the field and 40.2 percent from deep.

His ability to stretch opposing defenses and connect from deep has been an ideal pairing with Tyrese Haliburton, who is always looking to facilitate and set his teammates up for good looks when opposing defenses collapse on his penetration.

Nesmith became something of a household name during the Pacers’ stunning run to the NBA Finals last season. 

His biggest individual moment came during Game 1 of the Eastern Conference Finals when he caught fire from beyond the arc and spearheaded a dramatic comeback win over the New York Knicks. He finished with 30 points on 8-of-9 shooting from three-point range and set the tone for a series in which he connected on 53.3 percent of his triples.

In addition to his shooting in the postseason, he played lockdown defense against multiple positions. His ability to stick with smaller ball-handlers or challenge bigger forwards on the wings allowed the Pacers to mix and match their lineups depending on the opponent in different rounds.

Nesmith figures to be even more important for the team in 2025-26 with Haliburton sidelined with an Achilles injury, and he will assume those additional responsibilities with a new contract extension in his pocket.