The Collaborative International Dictionary of English v.0.48:

Niece \Niece\ (n[=e]s), n. [OE. nece, F. ni[`e]ce, LL. neptia,
   for L. neptis a granddaughter, niece, akin to nepos. See
   Nephew.]
   1. A relative, in general; especially, a descendant, whether
      male or female; a granddaughter or a grandson. [Obs.] --B.
      Jonson. Wyclif. Shak.
      [1913 Webster]

   2. Especially: A daughter of one's brother or sister, or of
      one's brother-in-law or sister-in-law. In modern English,
      this is the primary meaning.
      [1913 Webster]

WordNet (r) 3.0 (2006):

niece
    n 1: a daughter of your brother or sister [ant: nephew]

Moby Thesaurus II by Grady Ward, 1.0:

43 Moby Thesaurus words for "niece":
   aunt, auntie, blood brother, brethren, brother, bub, bubba, bud,
   buddy, country cousin, cousin, cousin once removed,
   cousin twice removed, daughter, father, first cousin,
   foster brother, frater, grandnephew, grandniece, granduncle,
   great-aunt, great-uncle, half brother, kid brother, mother, nephew,
   nuncle, nunks, nunky, second cousin, sis, sissy, sister,
   sister-german, sistern, son, stepbrother, stepsister, unc, uncle,
   uncs, uterine brother



Bouvier's Law Dictionary, Revised 6th Ed (1856):

NIECE, domestic relations: The daughter of a person's brother or sister.
Amb. 514; 1 Jacob's Ch. R. 207.