Interesting.....have any pets? Make it their doggie hideout. No pets - wall it up. You could do built-ins -that follow the stair up - but you would need to open more area up to balance it out. You might spend months looking at it and it might cost less to just make it go away.

If no pets- large rectangle mirror (sitting on floor)

Cover with drywall and patch/paint to match the wall. It will open up a whole new world in the room for you!

Cover it, put a sofa or a bookcase in front of it - or try searching for "faux fireplace" on Houzz. It's basically a low niche, too and people have solved that "problem" before. I like the ones filled with firewood; that might come in handy if you have a real fireplace in the room.

What about using that wall as an art installation? Find something large to cover the hole. (Hello, Ikea.) Do another large piece diagonally up. Fill in with other pieces.

Hmmmm.

Thank you everyone for the replies, I have large pets but they are outside. So I could try the large mirror. Only thing is we have a L shapped sectional... the fire place is right across the niche and the formal dining is in the same space... ughhh! I'll have to post more pictures its hard to describe. Thank you all for the ideas :)

Darzy is right. Frame it, drywall, paint to match.

Chances are if you don't like it, the next people buying the house won't either. Just take care of it now by drywalling and be done with it. Then, you are free to move about the room.

Put cabinet doors on it and use it for storage.

2-year-old thread.