A niece is the female child of a person's brother or sister. A niece can also be the female child of the brother or sister of a person's spouse.
A niece is three steps from you in the family tree, as one of your niece's parents is your sibling; your parents are two of her grandparents. If you have a niece by marriage, your spouse's brother or sister is one of your niece's parents. If your niece or nephew has a daughter, that child is your great-niece. Since the daughters of your siblings are your nieces, your daughters are your siblings' nieces.