Proper way to reference files relative to application root in Node.JS

To get an absolute filesystem path to the directory where the node process is running, you can use process.cwd(). So assuming you are running /server.js as a process which implements /services/template-reading-service.js as a module, then you can do the following from /service/template-reading-service.js:

var appRoot = process.cwd(),
    templateContent = fs.readFileSync(appRoot + '/templates/my-template.html', 'utf8');

If that doesn't work then you may be running /service/template-reading-service.js as a separate process, in which case you will need to have whatever launches that process pass it the path you want to treat as the primary application root. For example, if /server.js launches /service/template-reading-service.js as a separate process then /server.js should pass it its own process.cwd().

Try

var templateContent = fs.readFileSync(path.join(__dirname, '../templates') + '/my-template.html', 'utf8');