Kevin McHale has been away from the team since Nov. 10, and Alexandra "Sasha" McHale died Saturday. In a statement, Rockets owner Leslie Alexander said the "entire organization is mourning."
Interim coach Kelvin Sampson said he spoke to Kevin McHale on Monday.
"He's doing funeral arrangements for his daughter," Sampson said. "He's very emotional. Tough time. That's his baby girl. Nothing else has to be said."
The sad news came after perhaps the Rockets' best performance of the season in Friday's 131-103 win over New York, Houston's second straight home victory following an 0-3 trip.
With Jeremy Lin facing his former team for the first time and contributing 13 points, the Rockets (6-7) were powered by 33 from James Harden and 31 from second-year standout Chandler Parsons, who is averaging 20.1 in his last seven games.
Parsons' 13-of-17 shooting was the biggest reason the Rockets hit a season-best 51.7 percent from the field and matched their highest point total since 1995.
"Chandler's just a winner," Sampson said. "Right now he's just in a groove."
Lin is still looking to get hot. He's shooting just 34.8 percent on the season and he's totaled nine assists and 12 turnovers in his last three games.
After his much-anticipated reunion with the Knicks, he gets a tough matchup with the point guard he replaced in Houston. Lowry, who spent three-plus seasons with the Rockets, will be facing them for the first time since being traded to the Raptors for a draft pick in July.
"I understand it's a business," Lowry said. "I never take anything personal involving trades. This league, you can't get too caught up in what happens when you get traded."
Although he missed six games with an ankle injury earlier this month, Lowry is back and continuing to make an impact for Toronto, averaging 18.3 points and 6.1 assists.
"He can do it all," Lin said. "He's a really good point guard, and I think he's underrated in a lot of ways, so I'll have my hands full."
The Raptors (3-11) have lost all four games since Lowry returned from his injury, although they led in the fourth quarter of each. Following consecutive one-point losses at Charlotte and Detroit, they forced San Antonio into a second overtime Sunday before falling 111-106.
Andrea Bargnani had a miserable afternoon, hitting 2 of 19 from the field and 0 of 7 from 3-point range to finish with a season-low four points. He had a season-high 34 in the previous game against the Pistons.
"Come hell or high water, he's our guy," Raptors coach Dwane Casey said.
"We're in a process," Casey added. "And I know it doesn't look like it, and it sounds like a broken record, but we are getting better."
The Raptors have lost five straight in Houston to fall to 3-14 there all-time.
Sampson said the Rockets plan to wear black patches on their jerseys to honor Sasha McHale.