diff --git a/qiskit/providers/aer/noise/passes/local_noise_pass.py b/qiskit/providers/aer/noise/passes/local_noise_pass.py
index feaa21af39..f6e1c30bbe 100644
--- a/qiskit/providers/aer/noise/passes/local_noise_pass.py
+++ b/qiskit/providers/aer/noise/passes/local_noise_pass.py
@@ -14,13 +14,14 @@
 """
 from typing import Optional, Union, Sequence, Callable, Iterable
 
-from qiskit.circuit import Instruction
+from qiskit.circuit import Instruction, QuantumCircuit
 from qiskit.dagcircuit import DAGCircuit
+from qiskit.converters import circuit_to_dag
 from qiskit.transpiler import TransformationPass
 from qiskit.transpiler.exceptions import TranspilerError
 from ..errors import QuantumError, ReadoutError
 
-InstructionLike = Union[Instruction, QuantumError]
+InstructionLike = Union[Instruction, QuantumError, QuantumCircuit]
 
 
 class LocalNoisePass(TransformationPass):
@@ -100,31 +101,52 @@ def run(self, dag: DAGCircuit) -> DAGCircuit:
 
             qubits = [qubit_indices[q] for q in node.qargs]
             new_op = self._func(node.op, qubits)
+
             if new_op is None:
+                # Edge case where we are replacing a node with nothing (removing node)
                 if self._method == "replace":
                     dag.remove_op_node(node)
                 continue
+
             if isinstance(new_op, ReadoutError):
                 raise TranspilerError("Insertions of ReadoutError is not yet supported.")
-            if not isinstance(new_op, Instruction):
+
+            # Initialize new node dag
+            new_dag = DAGCircuit()
+            new_dag.add_qubits(node.qargs)
+            new_dag.add_clbits(node.cargs)
+
+            # If appending re-apply original op node first
+            if self._method == "append":
+                new_dag.apply_operation_back(node.op, qargs=node.qargs)
+
+            # If the new op is not a QuantumCircuit or Instruction, attempt
+            # to conver to an Instruction
+            if not isinstance(new_op, (QuantumCircuit, Instruction)):
                 try:
                     new_op = new_op.to_instruction()
                 except AttributeError as att_err:
                     raise TranspilerError(
                         "Function must return an object implementing 'to_instruction' method."
                     ) from att_err
+
+            # Validate the instruction matches the number of qubits and clbits of the node
             if new_op.num_qubits != len(node.qargs):
                 raise TranspilerError(
                     f"Number of qubits of generated op {new_op.num_qubits} != "
                     f"{len(node.qargs)} that of a reference op {node.name}"
                 )
 
-            new_dag = DAGCircuit()
-            new_dag.add_qubits(node.qargs)
-            new_dag.add_clbits(node.cargs)
-            if self._method == "append":
-                new_dag.apply_operation_back(node.op, qargs=node.qargs, cargs=node.cargs)
-            new_dag.apply_operation_back(new_op, qargs=node.qargs)
+            # Add the noise op returned by the function
+            if isinstance(new_op, QuantumCircuit):
+                # If the new op is a quantum circuit, compose its DAG with the new dag
+                # so that it is unrolled rather than added as an opaque instruction
+                new_dag.compose(circuit_to_dag(new_op), qubits=node.qargs, clbits=node.cargs)
+            else:
+                # Otherwise append the instruction returned by the function
+                new_dag.apply_operation_back(new_op, qargs=node.qargs, cargs=node.cargs)
+
+            # If prepending reapply original op node last
             if self._method == "prepend":
                 new_dag.apply_operation_back(node.op, qargs=node.qargs, cargs=node.cargs)
 
diff --git a/releasenotes/notes/fix-local-noise-pass-f94546869a169103.yaml b/releasenotes/notes/fix-local-noise-pass-f94546869a169103.yaml
new file mode 100644
index 0000000000..df686d3185
--- /dev/null
+++ b/releasenotes/notes/fix-local-noise-pass-f94546869a169103.yaml
@@ -0,0 +1,12 @@
+---
+fixes:
+  - |
+    Fixes an issue with :class:`.LocalNoisePass` for noise functions that
+    return a :class:`.QuantumCircuit` for the noise op. These were appended
+    to the DAG as an opaque circuit instruction that must be unrolled to be
+    simulated. This fix composes them so that the cirucit instructions are
+    added to the new DAG and can be simulated without additional unrolling
+    if all circuit instructions are supported by the simulator.
+
+    See `#1447 <https://github.com/Qiskit/qiskit-aer/issues/1447>`__
+    for details.
diff --git a/test/terra/noise/passes/test_local_noise_pass.py b/test/terra/noise/passes/test_local_noise_pass.py
index d4cb211e44..ac0e769d78 100644
--- a/test/terra/noise/passes/test_local_noise_pass.py
+++ b/test/terra/noise/passes/test_local_noise_pass.py
@@ -16,7 +16,7 @@
 from qiskit.providers.aer.noise import ReadoutError, LocalNoisePass
 
 from qiskit.circuit import QuantumCircuit
-from qiskit.circuit.library.standard_gates import SXGate, HGate
+from qiskit.circuit.library.standard_gates import SXGate, HGate, CXGate
 from qiskit.transpiler import TranspilerError
 from test.terra.common import QiskitAerTestCase
 
@@ -94,3 +94,23 @@ def out_readout_error(op, qubits):
         noise_pass = LocalNoisePass(func=out_readout_error, op_types=HGate)
         with self.assertRaises(TranspilerError):
             noise_pass(qc)
+
+    def test_append_circuit(self):
+        qc = QuantumCircuit(2)
+        qc.cx(0, 1)
+
+        def composite_error(op, qubits):
+            circ = QuantumCircuit(2)
+            for q in qubits:
+                circ.x(q)
+            return circ
+
+        noise_pass = LocalNoisePass(func=composite_error, op_types=CXGate)
+        noise_qc = noise_pass(qc)
+
+        expected = QuantumCircuit(2)
+        expected.cx(0, 1)
+        expected.x(0)
+        expected.x(1)
+
+        self.assertEqual(expected, noise_qc)