I don't think that is going to be an easy job. Are you sure that you can't live with it? I would start by removing all the other dated elements in the room (wallpaper, paneling, blinds, ceiling fan) and then see how you feel about the fireplace..

Instead of thinking about removing the whole fire place why not just lower the front bottom of it and work from there... And like Brenda said get rid of all the other elements!

Keep the fireplace, add a bigger mantle. Remove everything else, the wood paneling, blinds and definately the ceiling fan and what is that on the walls above the wood panelling? remove it. That would brighten up the space, then put some nice greenery on the floor next to the fireplace or a nice basket to one side and maybe a vase on the other, put a large piece of artwork over the fireplace or even a mirror. Use your budget on new lighting and built in shelves on the right side of the fireplace, and maybe hanging shelves on the left side if there is room. This looks like a great space it just needs updating.

horrible stone job--too much mortar showing and random stones willy nilly.. I would cover the stone with better stone--maybe stacked stone. maybe a piece of granite on top of the hearth.

If you can, remove the hearth, which has awkward flagstones on top. Then stain the grout a darker grey. As the others have pointed out, remove the paneling and wallpaper...etc.

I would not remove the fireplace, but the wood paneling and wall paper must go and the window treatment. Then I would remove the stone top and replace it with a solid stone and then you might want to cover the mantel in wood.

I would remove it immediately!! I just bought a home with a huge center stone fireplace and this will be one of the first things to go. Too big and massive. I think a streamlined fireplace will be better. I have heard it will be a mess to take down. Just be prepared.

Yes, you can demo the existing stone and redo with a more modern stone that fits your style. MANY options in cultured and natual stone. If you should go that route, installing larger hearth stones that slightly contrast with the stone you chose would help the hearth pop out a little. Contact a local professional/mason in your area for stone options.

These are all great ideas, I'm going to discuss them with my husband and see what we come up with. The paneling will be removed but the wall is textured and I need to figure out how to remove it.

Thank you everyone for your input. I'm new to all of this and will have many more questions to come I'm sure.

I would definitely get rid of the wainscot, re-drywall your textured walls and cover up the fireplace and add a new mantle, and flank it with lit bookshelves.

Like sheryl, I am wondering what that heavy textured appearance is above the wainscoting? Is this some typt of applied material you need to remove?

I love to demo...I always have a sledge hammer near by ;) Yes, I would take it ALL down and start anew! Except the beams.

- I don't hate the stone, but the pieced-together hearth bothers me a little ( I actually like overgrouted stone, it is more real to me as a structural element than just a decorative veneer).

If the fireplace is true stone masonry and not just a thin veneer, this is a REALLY big project. I second the motion to get a professional in to give you a realistic idea of what needs to happen. Put the sledge hammer away for a minute.

A solid hearth would help, like so:
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