"I extend my deepest condolences to Kevin and Lynn for the loss of their beautiful daughter, Sasha, on Saturday afternoon," Rockets' owner Leslie Alexander said in a statement.
Alexandra "Sasha" McHale had long battled lupus, an auto-immune disease, and was hospitalised with a related
condition, the Houston Chronicle said.
Kevin McHale had been on leave since November 10 for what the team described as a personal family matter.
Assistant Kelvin Sampson has served as the Rockets' acting coach during McHale's absence.
"Sasha was a daddy's girl," Sampson said.
"I remember last year during the lockout when we were meeting, she got sick. She was on a study abroad and had to come back. He just talked about her all the time. It's just tough. It's terrible. Terrible, terrible, terrible."
The Rockets went ahead with a scheduled practice on Sunday.
"It's really tough," Rockets guard Jeremy Lin said.
"I don't think I've ever had this much communication with a head coach.
"Even while he was gone, he was texting me after every game and before games. I was like, 'Wow.' Obviously you have your own situation, but the fact that you're thinking about us shows a lot about who he is as a person."
Forward Chandler Parsons also called the situation terrible for everyone.
"It's just tough to see him like this just knowing how close he is to his family," Parsons said. "I feel really, really bad.
"We're playing for Coach Mac. We're playing for his family. We're playing for his daughter."
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