diff --git a/CATALYST.md b/CATALYST.md
index 1290dc5..01d1ff2 100644
--- a/CATALYST.md
+++ b/CATALYST.md
@@ -589,6 +589,34 @@ define component input "name" {
 
 # Catalyst Functions
 
+## tm_source(relative_path)
+
+This function can be used inside of components code generation.
+
+It should be used referencing relative path to e.g. Terraform modules.
+
+At code generation this relative path defined in the components context will be translated into a relativ path based on the stack the code will generated in.
+
+If component, bundle and referenced path ae all local, the generated path in the stack will be relative pointing to the correct module location within the repository.
+
+If the references are remote, the remote referenced path will be adjusted accordingly.
+
+The folling code inside of a component describes how to reference a module in the parent directory.
+
+```hcl
+generate_hcl "main.tf" {
+  content {
+    module "my-module" {
+      source = tm_source("..") # reference a module in the parent directory
+
+      # ... input variables
+    }
+  }
+}
+```
+
+When referencing remote modules, this function is not required and can be omitted.
+
 ## tm_bundles(class) and tm_bundle(class, alias)
 
 To access information of instantiated bundles we provide two functions: