This is a job for a professional. There are many factors to take into consideration. The overall architectural style of the home, other rooms and furnishings used and color palette throughout so that this room blends with the rest of the home. You have many great elements to work with. The period furnishings and millwork details are lovely. You would be wise to invest in a professional and be sure things are done well and you protect your investments. Best wishes!

Because of the rug,have you considered a Chinoiserie type approach? I think it could be very beautiful. Also,do you plan on painting the panelling or leaving it?

You have a lovely room and beautiful furniture and rug. The wallpaper is just a bit too contrasty to play nicely with them. I would do a tone on tone damask pattern, or a tone on tone vertical stripe. Either pattern is classic and traditional with oriental rugs. The colours should be pulled from the rug, but I'm thinking something in the champagne family. If you don't want to do wallpaper, tone on tone is easy to do with paint- just do a base coat of your colour in eggshell sheen and then add the pattern (either with tape or a stencil) with a clear glaze in satin sheen.

Stelh Col ......Your rug has you halfway there;-) Basically I would look for a trellis type paper or something more obviously chinoiserie & figural. Maybe a slight sheen since you are keeping the darker panelling. (unless you have deep pockets and want handpainted) ) Really depends on how far you want to take it and how much art you have for the walls. More art = simpler paper. Frankly a refined grasscloth could also look fabulous. Add some blue and white accents atop the table & recover the chairs. If the walls are very detailed & figural,make the chairs a simpler chinese inspired geometric but if the walls are more plain.... then more drama (ala Chiang Mai) for the chairs. All of your colour cues are in your rug. http://www.chinoiseriechic.net/

Stelh Col Can you take a close up pic of a portion of your lovely rug? Also, are you in the US?

For me, a plain unpatterned grasscloth feels too modern for this space. There are printed grasscloths with traditional patterns if you like the texture. But pattern and texture together might be too much. If I did to grasscloth in this room, I'd want one with a vertical rather than a horizontal grain.

Umm,I think grasscloth only reads as modern if you are new to it. That said,the room would look more modern if painted a mid to deep tone (colour up to you) and use large-ish photographic or more modern art framed very simply. Keep accessories spare and sculpturally simple, use simple panel drapes or do shades. All mounted high. I can't tell if you have enough light to paint the room white or off white. (dark rooms painted white often go sad) Maybe,just remember that painting a room like that white emphasizes the furniture,the rug,and the panelling. High contrast. Good luck!

holly, I'm not "new to grasscloth". And I said, "for me" it feels modern.

Your rug and furnishings could totally work in that room! I would pull down all of the wallpaper and then paint the room in a light color (sample the grey-blue in your rug and see how it looks). Then, "update" the space with new accessories and artwork that blend with your living room.

As far as spending a few more $$ - any chance you could pull out those railings??? That would go a long way to modernizing the woodwork. And, your chandelier is beautiful, but it looks a bit small for the room (and hung too high).