Prosecutors agreed to drop all charges if the players stay out of trouble for two years.
Tinsley faced a felony charge of intimidation, and misdemeanor counts of battery, disorderly conduct and intimidation in the fight at the 8 Seconds Saloon in February 2007. Daniels was charged with battery and disorderly conduct, both misdemeanors.
"We think this is the appropriate thing," said Tinsley's attorney, James Voyles, after the 20-minute session in a Marion County court. "We're grateful and relieved."
The players must serve 32 hours of community service.
Tinsley also agreed to complete a behavior-modification program, which would likely be anger management or counseling.
"We believe this is a fair resolution," said David Wyser, chief trial deputy for the Marion County prosecutor.
According to a police report, bar manager Mark Nicholson said Tinsley threatened to kill him during the melee. The report also said Tinsley punched Nicholson, knocking him to his knees, and Daniels and another man struck him repeatedly in the face.
But Wyser said he received a letter over the weekend from Nicholson, saying he could not identify who hit him.
If either player fails to the complete the community service or behavior classes or commits a criminal offense in the next two years, the charges would be reinstated, said Matthew Symons, a spokesman for the prosecutor's office.
A compliance hearing was scheduled for May 19.
The Associated Press left messages Monday seeking comment from Pacers CEO Donnie Walsh and team president Larry Bird.