Pictures would help of room and wallpaper

No pictures because right now it is just 4 walls. Our first floor was gutted, this bathroom was just recently framed and dry walled. But imagine a 3 feet wide room, 6 feet long, toilet and vanities on opposite ends of the room. Here is the link to the Hygge & West wallpaper.

https://www.hyggeandwest.com/products/underwater-world-blue

I know, I love it! But it seems like it might be too much for such a small room with no window.

Here are some examples, One with white and one floor to ceiling in another pattern.

I think I would remove the chair rail and do the entire room in the paper (it is beautiful) or go with white chair rail and white below.

I would do the whole bathroom in the wallpaper. A small powder room is a great way to go bold. I did it to a similar size powder room with black paisley floor to ceiling and loved it. Try to wallpaper before you put the toilet back (if you took it out). Also paint the walls close to the blue in the paper, so you don't see the white wall if a seam doesn't match up perfect.

If you have good lighting (recessed + vanity), I think you can do it in the entire bathroom. I think a chair rail looks odd in a bathroom; maybe white wainscotting or tiles on lower half, but I like the idea of throughout.

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BTW, I love that paper! I can't put wallpaper up in my hall bath but our colors are navy/white/brass. I just ordered a sample of the Underwater World. I'm going to frame it and leave use white dry erase markers to leave notes/reminders to my kids!

I think it will work very well on all the walls. Powder rooms are spaces where you can go with something fun. If you look for dark wallpapers in powder rooms, you'll see that there are lots and they look amazing. The lighting doesn't have to be bright..it's a powder room so lights are usually pretty dim

what is the flooring going to be? with this wallpaper, I hope you're doing a gold or rose gold finish on the hardware/faucet and lighting.

So, you can paper the upper half and do a wainscot below. use white or a dark blue

this color and other items in this room would be the perfect match w/that paper

with doing the top half and lower paint, you'd be shooting for this type of look

I would do an actual wainscot and not just a chair rail. that paper deserves it.

or the white

or just do one entire wall

I also would remove the chair rail and fully paper the room.

Houzzers would love to see the finished room.

I agree with those who say to paper the whole room. You can absolutely do that in a powder room. In fact I would then paint the ceiling to match the gold. It will be stunning.