Light from celestial objects interacts with the molecules of the Earth’s atmosphere, resulting in the production of telluric absorption lines in ground-based spectral data. Correcting for these lines, which strongly affect red and infrared wavelengths, is often needed in a wide variety of scientific applications. Here, we present the template division telluric modeling (TDTM) technique, a method for accurately removing telluric absorption lines in stars that exhibit numerous intrinsic features. Based on the Earth’s barycentric motion throughout the year, our approach is suited for disentangling telluric and stellar spectral components. By fitting a synthetic transmission model, telluric-free spectra are derived. We demonstrate the performance of the TDTM technique in correcting telluric contamination using a high-resolution optical spectral time series of the feature-rich M3.0 dwarf star Wolf 294 that was obtained with the CARMENES spectrograph. We apply the TDTM approach to the CARMENES survey sample, which consists of 382 targets encompassing 22 357 optical and 20 314 near-infrared spectra, to correct for telluric absorption. The corrected spectra are coadded to construct template spectra for each of our targets. This library of telluric-free, high signal-to-noise ratio, high-resolution (ℛ > 80 000) templates comprises the most comprehensive collection of spectral M-dwarf data available to date, both in terms of quantity and quality, and is available at the project website.