I am not understanding the error "Undefined function or variable all_images" I currently have the following code;

function stimuli=letters_load(N, randord)
dirname= 'C:\Users\User\Documents\MATLAB\stimuli';

if~exist('N','var')
    N=21;
end

if N<1 | N>21
    error('Number of images selected is out of range')
end

if~exist('randord','var')
    randord=false;
end

d=dir([dirname '*.jpg']);
for i=1:length(d)
    file=[ dirname d(i).name ];
    all_images{i}=imread(file);
end

if randord
    idx=randperm(21);
    img = all_images(idx(1:N));
else
    img = all_images;
end

Answer 1

[Walter Roberson]

You only assign into all_images if length(d) is at least 1.

In other words, the result of the dir() was empty.

Note that the result of

[dirname '*.jpg']

is going to be

'C:\Users\User\Documents\MATLAB\stimuli*.jpg'

You should switch to using fullfile():

fullfile(dirname, '*.jpg')

also you should pre-allocate:

all_images = cell(length(d), 1);