This is the image we will be working with:
The image we are going to put on the wall is this:
In our room image document, let's goto Filter > Vanishing Point. Notice the tools on the left - we need to first create a Plane. The plane will represent the perspective of what we want to work on. We draw a plane by clicking four corners. We will use the picture on the wall as a guide (we can zoom in with Ctrl+ and zoom out with Ctrl-):
Make sure to line up the plane as closely as possible to the picture frame. Once we've made the four corners, we can resize the plane like so:
We now want to erase the existing picture on the wall. We can do this using the Stamp tool. This works in a similar way to the regular clone stamp tool, except that it will use the plane to maintain the perspective. Choose the Stamp tool, and depending upon your chosen image, you may or may not want to use the healing option. Try it and if it doesn't work as expected, undo with Ctrl+Z and turn it off. Alt-click a source, like so:
When we Alt-click, we are sampling those pixels to paint with our left-click. We are wanting to paint over the existing picture, so let's do it:
We can also use the selection marquee tool to section off tricky areas, so we don't accidentally paint anywhere we don't want to.
The above image is after using the Stamp tool with Healing Off. As you can see it is not a very clean cover-up, so let's now choose the brush tool and turn Heal On. There is no need to set a source with this tool - it will sample pixels around where you paint. Paint over the ugly areas with smooth, straight strokes. It should all blend nicely and end up looking something like this:
It's still not perfect, but we are going to put a picture over it. Press Ok if you're still in the Vanishing Point filter, copy the image you want to use and also duplicate the room layer that we're editing. Then go back to Filter > Vanishing Point. Paste in the image:
First we should resize it with the transform tool if need be, and then move it onto the plane. Once we've positioned it how we want, press Ok and it should look something like this:
You will notice that we have a few jagged edges. To fix these, make a selection around the picture, inverse it (Select > Inverse), and delete the unwanted pixels. This is why we duplicated the layer earlier:
It looks a little flat right now, so we will add a Drop Shadow to the image:
Now we can make sure the edges are fine - the left side needs to be trimmed still. We will leave the right edge, as it looks like the 1px line is the side of the picture frame:
More Tutorials: 
