Terragrunt configuration is defined in a terraform.tfvars file in a terragrunt = { ... } block.

For example:

terragrunt = {
  include {
    path = "${find_in_parent_folders()}"
  }

  dependencies {
    paths = ["../vpc", "../mysql", "../redis"]
  }
}

Terragrunt figures out the path to its config file according to the following rules:

  1. The value of the --terragrunt-config command-line option, if specified.
  2. The value of the TERRAGRUNT_CONFIG environment variable, if defined.
  3. A terraform.tfvars file in the current working directory, if it exists.
  4. If none of these are found, exit with an error.

The --terragrunt-config parameter is only used by Terragrunt and has no effect on which variable files are loaded by Terraform. Terraform will automatically read variables from a file named terraform.tfvars, but if you want it to read variables from some other .tfvars file, you must pass it in using the --var-file argument:

terragrunt plan --terragrunt-config example.tfvars --var-file example.tfvars