Error: Unreadable module directory: "lstat modules/X: no such file or directory"

TL;DR

Your module block's local source path does not exist. Local sources are relative to the file that declares them and must start with ./ or ../. Fix the path, re-run terraform init.

The error

Error: Unreadable module directory

Unable to evaluate directory symlink: lstat modules/greetings: no such
file or directory

Steps to fix

1. Open the module block and read the source value.

• Expected: you see the path Terraform tried.

1. Check it from the declaring file's directory: ls [source]. Remember it is relative to the file, not to where you ran the command.

• Expected: you confirm the folder is missing or misspelled.

1. Fix the path, keeping the ./ prefix for local modules:

   module "greeting" {
     source = "./modules/greeting"
   }

• Expected: the path resolves from the declaring file.

1. Run terraform init.

• Expected: module installs; init succeeds.

When to use this

• terraform init fails with Unreadable module directory right after adding or moving a local module, especially after refactors that move folders.

When NOT to use this

• Module not installed means init was never re-run. Registry/GitHub source failures are download problems, not path problems. Without the ./ prefix, Terraform treats the string as a Registry address and fails with a 404 instead.

Compatibility

• All Terraform versions; local module source resolution is unchanged.

Root cause

Local module sources are filesystem paths resolved at init time, relative to the configuration file containing the module block. A typo, a moved folder, or a missing ./ prefix (which flips interpretation to a Registry address) all produce this at init.

Edge cases

• Symlinked module dirs: a broken symlink gives the same lstat error; fix the link target.
• Windows paths: use forward slashes; backslashes are not valid in source addresses.
• Monorepos: double-check which file declares the module; the relative base is that file's directory, not the repo root.