The Bucks' playoff hopes all but vanished in their third straight loss.
Last week Milwaukee was within a win of moving into a tie for the eighth and final post-season spot in the Eastern Conference, but four losses in five contests have dropped the Bucks three games behind eighth-place Philadelphia with four to play.
Indiana has won seven in a row and is headed for the No. 3 seed in the East, setting up a potential first-round meeting with the crumbling Orlando Magic.
The Pacers led by 13 points with 3:45 to play Thursday and held off a late Milwaukee charge that briefly sliced the margin to five.
Granger scored 29 points, Hill had 21 and West produced 20 points to go with 14 rebounds.