Nothing. It's already kind of busy with the wood and stone. Because you have something on the mantle, Your eye is drawn there. If you put something that isn't somehow coordinated, I feel you'll lose your focal point.

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Nothing.

another vote for nothing, let it be its own thing

Nothing.

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This might be a better one because of size

Nothing

Another vote for nothing.

A big family last name initial.

I see how it is a tish busy...but EMPTY?? No. Something HAS TO or you will forever spend your gatherings discussing, "Whatcha gunna put in the hole?"

If you absolutely have to put something there, then you need to tone down the mantle and put something more textural above. In my very crude mock up, I gave you a simple black larger mantle to blend with the other black features and a metal panel in the colors of the wood. But I still like it better without something there and a new mantle.

Typically in church architecture such a niche would be over an altar with an artwork meant to inspire worship and reverence, while the altar below was filled with candles to light it (as well as to help the ritual-doers see what they were doing.) So in times past, the ”right” thing to put into that niche would be the portrait of the family that is now propped up on the fireplace mantle alongside the candles.

If re-working the family portrat to put up there would be unsuitable, it still might make sense to put something up there that has a private meaning, even if the connection isn’t obvious to others. For example, if one of the features of your wedding was that you got married in a field of sunflowers, putting a reference to that in the niche might be nice. Or some other such thing....

Another possibility is to have a ”fill the niche” party, and ask your friends and family to each bring something to put up there (if only a picture or drawing of it) and try them all out and have a vote as to what’s best. If you serve alcohol, have a designated ladder climber who stays sober placing the various things in the niche.

Please don't be upset at my saying this but the wood wall and ceiling are so distracting I'm not sure it matters what you put in your niche. The wood just overpowers everything. Would you consider covering the wood wall with sheetrock? Also, might suggest you tone down the wood of the ceiling by pickling it.

It would help to see more of you room to get an idea of your taste.

I like the look of the black mantle!

I wouldn't add anything, but suggest mimicing the arch with a large mirror and rethink mantle accessories. These will draw the eye to where it should be. (If there was no niche, you wouldn’t be adding anything that high up.)

Curious -how high off floor is the bottom of that nook & what’s the height X width of the nook? I see it’s high but cannot put into perspective. Of all the suggestions presented, I favor @decoenthusiaste idea of a large family initial. Sort of like a family crest up there & it is simple. I do like the idea of a beefier and / or a darker mantle to balance weight of bottom of room with ceiling.

A big cross( if you are religious) or a sculptured sunburst, or nothing.

I like italmover's tapestry idea as well as Maureen suggestion of an arched mirror to echo the niche's shape. In the one pic you shared, I see a lot of contrast with the white walls, stone and wood. Not sure the current mix is as harmonious as it could be (the mantel doesn't optimal) but hard to know since screen colours are so unreliable. Would need to see a picture of the whole wall as well as the whole space.

Paint the wood part of the wall same color as the drywall and paint the mantle black

As far as what to place in the niche? Something that is of importance to your family. Are you religious then an icon or statue. Are you a hunter? Then a tachidermia item. Etc etc. Otherwise a valuable piece of art. Or something defining for you

I don’t think every space needs to be filled — I’d leave it empty. It’s nicely decorative already, and to me, too high up to have something on display that won’t look like a shrine.

A piece of decorative iron work.

It reminds me of a bell tower, so I'd look for a nice bell to hang there. Something aged so it doesn't stand out too much against the stone. Since it isn't too deep, the bell couldn't be too wide at the bottom:

probably too wide, but you could hang from a hook on the back wall instead of from the top of the arch:

You could also have a piece of leaded glass made to cover it and have it back-lit with battery operated, remote controlled lights.

Take picture of full wall. It’s a limited picture showing overall aesthetics for your room The little amount we can see. I would agree the diagonal wood needs to be painted same colors as wall and nothing added to niche