diff --git a/cmd/templ/generatecmd/symlink/symlink_test.go b/cmd/templ/generatecmd/symlink/symlink_test.go
new file mode 100644
index 000000000..eac5bc8bd
--- /dev/null
+++ b/cmd/templ/generatecmd/symlink/symlink_test.go
@@ -0,0 +1,52 @@
+package symlink
+
+import (
+	"context"
+	"io"
+	"log/slog"
+	"os"
+	"path"
+	"testing"
+
+	"github.com/a-h/templ/cmd/templ/generatecmd"
+	"github.com/a-h/templ/cmd/templ/testproject"
+)
+
+func TestSymlink(t *testing.T) {
+	log := slog.New(slog.NewJSONHandler(io.Discard, nil))
+	t.Run("can generate if root is symlink", func(t *testing.T) {
+		// templ generate -f templates.templ
+		dir, err := testproject.Create("github.com/a-h/templ/cmd/templ/testproject")
+		if err != nil {
+			t.Fatalf("failed to create test project: %v", err)
+		}
+		defer os.RemoveAll(dir)
+
+		symlinkPath := dir + "-symlink"
+		err = os.Symlink(dir, symlinkPath)
+		if err != nil {
+			t.Fatalf("failed to create dir symlink: %v", err)
+		}
+		defer os.Remove(symlinkPath)
+
+		// Delete the templates_templ.go file to ensure it is generated.
+		err = os.Remove(path.Join(symlinkPath, "templates_templ.go"))
+		if err != nil {
+			t.Fatalf("failed to remove templates_templ.go: %v", err)
+		}
+
+		// Run the generate command.
+		err = generatecmd.Run(context.Background(), log, generatecmd.Arguments{
+			Path: symlinkPath,
+		})
+		if err != nil {
+			t.Fatalf("failed to run generate command: %v", err)
+		}
+
+		// Check the templates_templ.go file was created.
+		_, err = os.Stat(path.Join(symlinkPath, "templates_templ.go"))
+		if err != nil {
+			t.Fatalf("templates_templ.go was not created: %v", err)
+		}
+	})
+}
diff --git a/cmd/templ/generatecmd/watcher/watch.go b/cmd/templ/generatecmd/watcher/watch.go
index 57d725f2a..f97149c8d 100644
--- a/cmd/templ/generatecmd/watcher/watch.go
+++ b/cmd/templ/generatecmd/watcher/watch.go
@@ -2,6 +2,7 @@ package watcher
 
 import (
 	"context"
+	"io/fs"
 	"os"
 	"path"
 	"path/filepath"
@@ -36,18 +37,24 @@ func Recursive(
 // WalkFiles walks the file tree rooted at path, sending a Create event for each
 // file it encounters.
 func WalkFiles(ctx context.Context, path string, out chan fsnotify.Event) (err error) {
-	return filepath.WalkDir(path, func(path string, info os.DirEntry, err error) error {
+	rootPath := path
+	fileSystem := os.DirFS(rootPath)
+	return fs.WalkDir(fileSystem, ".", func(path string, info os.DirEntry, err error) error {
 		if err != nil {
 			return nil
 		}
-		if info.IsDir() && shouldSkipDir(path) {
+		absPath, err := filepath.Abs(filepath.Join(rootPath, path))
+		if err != nil {
+			return nil
+		}
+		if info.IsDir() && shouldSkipDir(absPath) {
 			return filepath.SkipDir
 		}
-		if !shouldIncludeFile(path) {
+		if !shouldIncludeFile(absPath) {
 			return nil
 		}
 		out <- fsnotify.Event{
-			Name: path,
+			Name: absPath,
 			Op:   fsnotify.Create,
 		}
 		return nil