I would paint the wood paneling walls white (or remove them). Also, paint out the ceiling but maybe leave the beams natural. Add a mantel to the fireplace.

Definitely paint out the wood panelling in white. It will really lighten up your space. I love the look of a whitewashed brick or even fully paint it out white. I'd paint the ceiling too and love the idea from Sina to leave the beams exposed. Are those sconces on the brick? I would update those if they are. Do you use the fan? Need the fan? If not, I'd replace that too. If you're really looking to update it might be worth it to invest in some pot lights. If not, I'd recommend maybe a black orb chandelier. Toss those blinds and roman shade :s. I'd recommend some new draperies. You could go with a pattern for sure if everything else is crisp and white. Last thing, paint out the brick at the base of your fireplace (The Hearth). Another option would be to paint the hearth and your entire fireplace black (a bold look but this would be incredible!)

I'll attach a few photos. With the white panelling... you can see in this picture that the panels are horizontal as opposed to vertical like yours but you get the idea. I also love the idea of painting the ceiling a little bit darker. Just a dark grey or taupe. You'll see an inspiration photo of this as well.

Best of luck!

- Jackie

It will be beautiful painted out white ;).

Agree it will be great! I would remove the ceiling fan, especially if the ceiling is around 8 feet(?). They can often make ceilings look lower depending on the height.