\externalfigure won't find a metapost eps file in a subdirectory, if the mps has the numerical (.1) extension. Here's a minimal example (test.tex): \setupexternalfigures[directory={fig}] \starttext \externalfigure[simple.1] \stoptext where fig/simple.1 is from a simple .mp file that fills a 1-cm box (see below). The resulting test.pdf shows the gray box name : simple.1 file : simple.1 state: unknown Only this combination of circumstances triggers the problem. Giving the full path ("\externalfigure[fig/simple.1]") works fine, as does renaming the file to simple.mps (within the fig/ directory), as does using instead simple-1.pdf (made with mptopdf). Thus, I have several workarounds, but it might be useful to figure out what is not working. I've noticed this problem on and off for a while now, but only now made a minimal example. (Is the path-searching code trying to append extensions and directory prefixes at the same time, and thus not finding the file?) This is with MkIV 2013.05.28 from vanilla TL2013. For completeness, here's simple.1, although any file will show the problem equally well: %!PS %%BoundingBox: 0 0 29 29 %%HiResBoundingBox: 0 0 28.34645 28.34645 %%Creator: MetaPost 1.803 %%CreationDate: 2013.08.04:0841 %%Pages: 1 %%BeginProlog %%EndProlog %%Page: 1 1 0 0 0 setrgbcolor newpath 0 0 moveto 28.34645 0 lineto 28.34645 28.34645 lineto 0 28.34645 lineto closepath fill showpage %%EOF -Sanjoy