By default, Magento will only display subcategories instead of product on a product listing page which is like an obvious option to have but due to some reason it is not possible unless you are aware.

So let’s begin from the top:

1. In your Magento admin navigate to CMS > Static Blocks

2. Click “Add New Block” at the top right

3. Create a new static block as follows:

Block Title : Sub Category Listing

Identifier : subcategory_listing

Status : Enabled

Content :
{{block type=”core/template” template=”catalog/navigation/subcategory_listing.phtml”}}

4. Click “Save Block” in the top right

5. Go to the parent category under Catalog > Manage Categories.

6. Select the category that has sub-categories and under the “Display Settings Tab” reflect the following:

Display mode : Static Block only

CMS Block : Sub Category Listing

Is Anchor : No

7. Click “Save Category” at the top right

8. Create a new file called “subcategory_listing.phtml” with the following content:

app/design/frontend/yourpackagename/yourthemename/template/catalog/navigation/

Containing the following code:

<?php

$layer = Mage::getSingleton(‘catalog/layer’);

$_category   = $layer->getCurrentCategory();

$_categories = $_category->getCollection()->addAttributeToSelect(array(‘url_key’,’name’,’image’,’all_children’,’is_anchor’,’description’))

->addAttributeToFilter(‘is_active’, 1)

->addIdFilter($_category->getChildren())

->setOrder(‘position’, ‘ASC’)

->joinUrlRewrite();

?>

<div class=”listing-type-list catalog-listing”>

<ul id=”subcats” class=”clear”>

<?php foreach ($_categories as $_category): ?>

<?php if($_category->getIsActive()): ?>

<?php Mage::log($_category->debug(), null, ‘mylogfile.log’); ?>

<li>

<div class=”subcat clearfix”>

<a class=”now-from-container” href=”<?php echo $_category->getURL() ?>”></a>

<div class=”subcat-image”>

<a href=”<?php echo $_category->getURL() ?>” title=”<?php echo $this->htmlEscape($_category->getName()) ?>”>

<img src=”<?php echo $this->htmlEscape($_category->getImageUrl()) ?>” width=”190″ alt=”<?php echo $this->htmlEscape($_category->getName()) ?>” />

</a>

</div>

<div class=”subcat-title-container”>

<h2><a href=”<?php echo $_category->getURL() ?>” title=”<?php echo $this->htmlEscape($_category->getName()) ?>”><?php echo $this->htmlEscape($_category->getName()) ?></a></h2>

</div>

</div>

</li>

<?php endif; ?>

<?php endforeach; ?>

</ul>

</div>

So, all this does is what grabs the current category being viewed and cycles through the sub categories of the parent category. Checks each sub category to see if it is active, and if so outputs it to the sub category list.

9. Make sure your sub categories have an image assigned to them under
Catalog > Manage Categories > Sub Category

And that’s how to display a sub category listing on a category page in Magento.

If you do not see the changes, then try clearing your Magento/browser cache. If your sub-categories show no thumbnails then make sure that the images are actually uploaded to your subcategories.