Place a decorative moveable screen in front of the water heater to block it from view. When choosing a decorative screen, avoid paper screens that are flammable, in case you have any problems with your water heater. Look for metal or mesh screens that won’t easily burn. If you can find one, an extra large fireplace screen can be a good option.
Hang a curtain around the water heater. When you are hanging the curtain, you will need to use longer hardware than usual to keep the curtain from touching the water heater. For safety purposes you should keep the curtain at least one foot in front of the water heater and choose a flame retardant fabric.
Employ a contractor to build a three-sided box that will cover the water heater from view. When the box is completed, paint it the same color as the walls to help it blend into the room. Alternately, you can paint the water heater a complementary color to help tie the room together, or cover the front with corkboard for notes and reminders if it is in a place your regularly access.
Hang pegboard from hooks using a basic item such as a heavy duty clothing rack if your water heater is in the garage. Once the pegboard is in place, you can use it to hang tools and other essentials that would otherwise take up space in your garage. Make sure the pegboard isn't too heavy to handily move in case you or a repairperson needs to access the water heater in an emergency.