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McMillan's Sonics had mediocre records the next two years, going 40–42 and 37–45. In the 2004–05 season, he led the team to 52–30 record in the regular season. The team advanced to the Western Conference Semifinals, where they lost to the San Antonio Spurs.

On July 1, 2013, McMillan was hired by the Indiana Pacers as an assistant coach for the 2013–14 season. He replaced Brian Shaw, who accepted the head coaching position with the Denver Nuggets. In May 2016, after former head coach Frank Vogel's contract was not extended, McMillan was promoted to replace Vogel as the Pacers' coach.

McMillan again served as an assistant coach under Krzyzewski for the US national team during the 2012 London Summer Olympics.

McMillan was an assistant coach under Mike Krzyzewski for the US national team in the 2006 FIBA World Championship and in the 2008 Beijing Olympics, winning bronze and gold medals, respectively. He is also a member of the National Junior College Basketball Hall of Fame, due to his All-American performance at Chowan.

After 19 years in Seattle, McMillan left Seattle on July 6, 2005, to become the head coach of the Portland Trail Blazers. He took over a team riddled with cap problems and off-the-court drama, but steadily calmed the waters in Portland. His hard-nosed coaching style earned him the nickname "Sarge." On December 5, 2009, McMillan ruptured his right Achilles tendon while scrimmaging with the Trail Blazers during practice. He coached much of the season in a protective boot after surgery and led the team to 50 wins in spite of a historic number of injuries to his key players. McMillan coached the Blazers until March 15, 2012.

After retiring in 1998, McMillan stayed in Seattle as an assistant under Paul Westphal. He held this role until 2000 when the Sonics fired Westphal and made McMillan interim coach. Although the team missed the playoffs during his first year, he earned a winning record of 38–29 as interim head coach. He was hired as head coach for the 2001–02 campaign and led the club to the playoffs. As a result, he was named permanent head coach after the season.

In the 1995–96 season, McMillan helped the SuperSonics reach the NBA Finals against the Michael Jordan-led Chicago Bulls. The SuperSonics were the only team to beat the Bulls three times that season (once in the regular season and twice in the playoffs).

McMillan was drafted by the Seattle SuperSonics with the 30th pick in the 1986 draft. He would spend his entire NBA career in Seattle. During his 12-year playing career, McMillan put up career averages of 5.9 points, 6.1 assists and 1.9 steals. He still shares (with Ernie DiGregorio) the NBA rookie record for assists in a single game with 25. McMillan played as the starting point guard position for the SuperSonics for most of his career. McMillan was known for his superb defense, leading the NBA in steals per game for the 1993–94 season and being named to the NBA All-Defensive Second Team for the 1993–94 and 1994–95 seasons. McMillan was also known for his balanced play, which led to four career triple-doubles.

McMillan grew up in the heart of North Carolina's basketball country and attended Raleigh's William G. Enloe High School, where he went unnoticed by major college scouts. After playing for two years at Chowan College (then a two-year school) in Murfreesboro, North Carolina, he returned to Raleigh to play for Jim Valvano at North Carolina State, before entering the NBA. McMillan helped lead NC State to a first-place tie in the Atlantic Coast Conference regular season in 1985, and the Elite Eight in both the 1985 and 1986 NCAA Championship Tournaments.

Known as "Mr. Sonic" for his 19 years of service to the team, his no. 10 jersey was retired by the SuperSonics. He was also known to be one-third of the "Big Mac" team of the SuperSonics in the late 1980s and early 1990s, the others being Xavier McDaniel and Derrick McKey.

Nathaniel McMillan (born August 3, 1964) is an American basketball coach and former player who is the head coach for the Indiana Pacers of the National Basketball Association (NBA). He coached the Seattle SuperSonics from 2000 to 2005, and the Portland Trail Blazers from 2005 to 2012. During his playing and coaching stints with the SuperSonics he was given the nickname "Mr. Sonic".