David West had 18 points and nine rebounds, and Lance Stephenson added 14 points for Indiana (33-21), which pulled within a half-game of the Knicks for second place in the East.
The Pacers shot 53 percent from the field, scored a season-high point total and had a season-best 28 assists against the Atlantic Division leaders. It was Indiana's largest margin of victory this season and New York's worst loss.
Tyson Chandler led New York with 19 points and 11 rebounds. Carmelo Anthony, the league's No. 2 scorer, finished with 15 points on 7-for-21 shooting.
George, fresh off a strong performance in his first All-Star Game appearance, made 11 of 19 shots and grabbed eight rebounds.
New York was called for three individual technical fouls and a flagrant foul, and J.R. Smith was ejected.
The Pacers led 37-21 in the second quarter when Amare Stoudemire picked up his third foul and was called for a technical.
As Indiana's lead grew, the Knicks unraveled. Kurt Thomas committed four fouls in six minutes, in the second quarter, then argued with fans when he went to the bench. Raymond Felton was called for a flagrant foul for elbowing Jeff Pendergraph.
Smith and Stephenson were jawing for much of the final minute of the first half, and they were called for double-technicals right after the halftime buzzer.
Indiana shot 60 percent from the field and led 74-44 at the break. George led the Pacers with 20 points in the first half, including a dynamic two-handed jam through traffic with 21 seconds left in the second quarter. Indiana's bench scored 27 points before the break and the Pacers made 23 of 29 free throws in the first half.
New York shot just 33 percent in the first half. Anthony scored eight points on 4-for-10 shooting before the break.
New York continued to fall apart in the second half. Smith was ejected in the third quarter, and the Pacers hit the 100-point mark with just over two minutes left in the third quarter. Indiana's largest lead was 39 points.
Notes: Indiana forward Danny Granger is close to a return. The former All-Star has missed the season with a sore left knee. Pacers coach Frank Vogel said he would bring Granger back slowly and as a reserve. ... The Pacers shot 61.1 percent in the first quarter and led 30-18. ... Indiana center Roy Hibbert fouled out with 8:18 remaining. He finished with eight points and four rebounds. ... Indiana committed 21 turnovers.