How to fix Error: Error rendering template: template not found in Terraform

First, confirm the template file actually exists at the path you've specified:

# For example, if using path.module/templates/init.tpl
ls -la /path/to/your/module/templates/init.tpl

# Or from the module directory
ls -la templates/init.tpl

If the file doesn't exist, create it with the appropriate content. Terraform cannot render a template from a file that doesn't exist - the file must be present before you run terraform plan or terraform apply.

The most common cause is forgetting to use interpolation syntax. Update your Terraform code:

Incorrect (will fail):

resource "aws_instance" "example" {
  user_data = templatefile("path.module/templates/init.tpl", {
    region = var.aws_region
  })
}

Correct:

resource "aws_instance" "example" {
  user_data = templatefile("${path.module}/templates/init.tpl", {
    region = var.aws_region
  })
}

The key difference is using ${path.module} with the dollar sign and curly braces. This tells Terraform to interpolate the actual module path instead of treating it as a literal string.

When running Terraform, ensure your working directory is correct:

# Show current directory
pwd

# List files to verify template exists relative to current directory
ls -la templates/

# If templates are in a subdirectory, adjust your path accordingly
ls -la ./path/to/templates/

If using Terraform modules, remember that path.module always refers to the directory where the .tf file is located, not your current working directory. This is especially important in CI/CD pipelines where working directories may vary.

If your error only happens in CI/CD but works locally, the issue is likely that template files aren't being transferred to the CI/CD environment:

# Example GitHub Actions - ensure all template files are included
- name: Upload artifacts
  uses: actions/upload-artifact@v3
  with:
    name: terraform-config
    path: |
      *.tf
      templates/
      modules/

# Or ensure they're checked out:
- name: Checkout code
  uses: actions/checkout@v3

For GitLab CI, Terraform Cloud, or other platforms, ensure your configuration includes all necessary files in the artifact or working directory before running Terraform.

While not required, using the .tftpl extension (Terraform Template) is a best practice:

# Rename your template file
mv templates/init.tpl templates/init.tftpl

Then update your Terraform code:

user_data = templatefile("${path.module}/templates/init.tftpl", {
  region = var.aws_region
})

This helps editors provide syntax highlighting and better error detection for template files.

If you're using local_file with rendered templates, use the correct attribute:

resource "local_file" "config" {
  # Use 'content' for rendered template content
  content = templatefile("${path.module}/templates/config.tftpl", {
    app_name = var.app_name
  })
  filename = "${path.module}/generated/config.ini"
}

# NOT 'source' - that expects a file path, not rendered content
# source = "${path.module}/templates/config.tftpl"  # Wrong!

The source attribute reads a literal file, while content accepts the rendered output from templatefile().