The Hoosiers (4-5, 2/3 Big Ten) snapped a three-game skid, while Illinois (3-6, 0-5) extended its school-record conference losing streak to 19 games.
Tevin Coleman rushed 15 times for a career-high 215 yards, the most by a Hoosier in the last 10 seasons. The teams engaged in a back-and-forth shootout until Coleman's 75-yard touchdown run edged Indiana ahead 42-35 with 12:41 remaining. Indiana burned the Illini's run defense for 371 yards and gained a season-high 650 yards overall.
Nathan Scheelhaase completed 38 of 57 passes for 450 yards and two touchdowns to lead Illinois. He added 45 yards and a score on the ground. Receiver Steve Hull exploded for 224 yards and two touchdowns on nine receptions.
The Illini were never the same after Coleman's crowd-thrilling burst. On their ensuing possession, linebacker Steven Funderburk came unblocked on a third-and-10 blitz to force an incompletion. Then Illinois coach Tim Beckman dialed up a fake punt that flopped on fourth down. Punter Justin DuVernois threw low and well short of the marker.
Two plays later, Stephen Houston rushed in from the 2-yard line to make it 49-35. Prior to that, neither side led by more than seven. Houston finished with 17 carries for 150 yards and two TDs.
Latimer surpassed his previous career highs of nine catches and 139 yards with a 50-yard TD reception from Nate Sudfeld on Indiana's fourth drive of the second half. The play also tied his career high of three touchdown catches and gave the Hoosiers a 35-28 lead.
The teams traded touchdowns on four consecutive possessions in the first quarter before defense prevailed in the second. Illinois kicker Taylor Zalewski was wide right on a 41-yard field goal try with 1:20 left in the half.
Each team scored 14 in the third quarter. Hull got wide open on Illinois' first drive of the second half for a 54-yard touchdown reception that tied the game at 21. Sudfeld, who finished 20-of-27 for 267 yards and three TD passes, twice hooked up with Latimer for scores in the period. Scheelhaase scrambled in from 14 yards out to briefly give Illinois its only lead of the day, 28-21.
Illinois right tackle Corey Lewis, who rushed for 27 touchdowns as a high school senior, tied the game at 35 when he fell on Ferguson's fumble in the end zone for his first college score.
Illinois entered the game with the 70th-ranked offense, averaging 402 yards. By the break, the Illini had gained 288. They finished with 612 yards, but a struggling defense cost them a chance to break through for their first Big Ten victory since Oct. 8, 2011, which came at Indiana.
Mitch Ewald kicked a 22-yard field goal with 5:25 remaining to give the Hoosiers a 17-point lead, their largest in over a month. Ewald is 8-for-8 this season.
Indiana might have a tough time regrouping before traveling to Wisconsin next week with several Hoosiers leaving the game because of injury. Coleman was helped off midway through the fourth quarter. Starting defensive backs Tim Bennett, Mark Murphy and Greg Heban also missed time.