Circular dependencies in Node.js occur when two or more modules import each other, leading to incomplete module exports or runtime errors. To handle this, you can refactor your code to remove the circular reference. One approach is to split shared logic into a separate module that both dependents can import, avoiding direct dependency between the two. Alternatively, you can use lazy loading (i.e., requiring the module within a function or class method rather than at the top of the file). This way, the module will only be loaded when it’s needed, breaking the circular reference. If not managed, circular dependencies can cause unexpected behavior and difficult-to-debug errors in your application.