a daughter of a person's brother or sister.
a daughter of a person's spouse's brother or sister.

1250–1300; Middle English nece < Old French < Vulgar Latin *neptia, for Latin neptis granddaughter; replacing Middle English nifte, Old English nift niece (cognate with Old Frisian, Old High German nift, Dutch nicht, Old Norse nipt) < Germanic; akin to Lithuanian neptė̃, Sanskrit naptī; cf. nephew Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2014.
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World English Dictionary
niece (niːs)
a daughter of one's sister or brother
[C13: from Old French niece granddaughter, ultimately from Latin neptis granddaughter]

Collins English Dictionary - Complete & Unabridged 10th Edition
2009 © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins
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Word Origin & History

c.1300, from O.Fr. nièce (12c.), earlier niepce, from L. neptia, from neptis "granddaughter," in L.L. "niece," fem. of nepos "grandson, nephew" (see nephew). Replaced O.E. nift, from P.Gmc. *neftiz, from the same PIE root. Until c.1600, it also could mean "a granddaughter"
or any remote female descendant. Cf. cognate Sp. nieta, O.Lith. nepte, Skt. naptih "granddaughter;" Czech net, O.Ir. necht, Welsh nith, Ger. Nichte "niece."
Online Etymology Dictionary, © 2010 Douglas Harper
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Example sentences
My niece in Minnesota called the other day to tell us she was engaged.
My niece has a son who has been diagnosed as autistic.
My niece has certainly not spent more than five minutes a day outside for years.
Not even a skeptical niece or nephew can doubt their zany stories.
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