diff --git a/netsim/ansible/templates/bgp/ios.macro.j2 b/netsim/ansible/templates/bgp/ios.macro.j2
index b2c851137..7d3787cc5 100644
--- a/netsim/ansible/templates/bgp/ios.macro.j2
+++ b/netsim/ansible/templates/bgp/ios.macro.j2
@@ -8,7 +8,8 @@
 {% macro neighbor_global(n,ip) %}
   neighbor {{ ip }} remote-as {{ n.as }}
 {% if n.local_as is defined %}
-  neighbor {{ ip }} local-as {{ n.local_as }}{% if n.replace_global_as|default(True) %} no-prepend replace-as{% endif +%}
+  neighbor {{ ip }} local-as {{ n.local_as }}{% 
+    if n.replace_global_as|default(True) and n.type != 'localas_ibgp' %} no-prepend replace-as{% endif +%}
 {% endif %}
   neighbor {{ ip }} description {{ n.name }}
 {% if n.type == 'ibgp' %}
@@ -20,14 +21,14 @@
 #}
 {% macro neighbor_af(n,ip,bgp) %}
   neighbor {{ ip }} activate
-{% if n.type == 'ibgp' %}
+{% if 'ibgp' in n.type %}
 {%   if bgp.community.ibgp|default([]) %}
   neighbor {{ ip }} send-community {{ community(bgp.community.ibgp) }}
 {%   endif %}
 {%   if bgp.next_hop_self is defined and bgp.next_hop_self %}
-  neighbor {{ ip }} next-hop-self
+  neighbor {{ ip }} next-hop-self{% if n.type == 'localas_ibgp' %} all{% endif +%}
 {%   endif %}
-{%   if bgp.rr|default('') and not n.rr|default('') %}
+{%   if bgp.rr|default('') and (not n.rr|default('') or n.type == 'localas_ibgp') %}
   neighbor {{ ip }} route-reflector-client
 {%   endif %}
 {% else %}{# EBGP IPv4 neighbor #}
diff --git a/netsim/modules/bgp.py b/netsim/modules/bgp.py
index 23e295716..871a05990 100644
--- a/netsim/modules/bgp.py
+++ b/netsim/modules/bgp.py
@@ -211,6 +211,13 @@ def build_ebgp_sessions(node: Box, sessions: Box, topology: Box) -> None:
           extra_data[k] = local_as_data
 
       session_type = 'localas_ibgp' if neighbor_local_as == node_local_as else 'ebgp'
+      if session_type == 'localas_ibgp':
+        if not features.bgp.local_as_ibgp:
+          common.error(
+            text=f'You cannot use BGP local-as to create an IBGP session with {ngb_name} on {node.name} (device {node.device})',
+            category=common.IncorrectValue,
+            module='bgp')
+          continue
 
       ebgp_data = bgp_neighbor(neighbor,ngb_ifdata,session_type,sessions,extra_data)
       if not ebgp_data is None:
diff --git a/netsim/topology-defaults.yml b/netsim/topology-defaults.yml
index 84724b5f7..56f0753fa 100644
--- a/netsim/topology-defaults.yml
+++ b/netsim/topology-defaults.yml
@@ -27,7 +27,7 @@ addressing:
 # Global, node and link attributes
 attributes:
   global: [ addressing,defaults,groups,links,module,name,nodes,plugin,provider ]
-  internal: [ input,includes,pools,Provider,Plugin ]
+  internal: [ input,includes,pools,Provider,Plugin,message ]
   link: [ bandwidth,bridge,name,prefix,role,type,unnumbered,interfaces,mtu,gateway,vlan_name ]
   link_internal: [ linkindex,parentindex ]
   link_no_propagate: [ prefix,interfaces,gateway ]
@@ -294,6 +294,7 @@ devices:
       bgp:
         local_as: True
         vrf_local_as: True
+        local_as_ibgp: True
       initial:
         ipv4:
           unnumbered: False
@@ -340,6 +341,7 @@ devices:
       bgp:
         local_as: True
         vrf_local_as: True
+        local_as_ibgp: True
       initial:
         ipv4:
           unnumbered: True
diff --git a/tests/integration/bgp/local-as/ibgp-local-as.yml b/tests/integration/bgp/local-as/ibgp-local-as.yml
new file mode 100644
index 000000000..de95bac78
--- /dev/null
+++ b/tests/integration/bgp/local-as/ibgp-local-as.yml
@@ -0,0 +1,31 @@
+message: |
+  This lab topology checks the IBGP local-as functionality -- creating BGP direct
+  session between two autonomous systems and using BGP local-as to make it a
+  fake IBGP session.
+
+  You should be able to see BGP routes from all four loopbacks on E1 and E2, and
+  ping between loopback interfaces of E1 and E2.
+defaults.device: iosv
+
+module: [ bgp,ospf ]
+
+nodes:
+  r1:
+    bgp.as: 65000
+    bgp.rr: True
+  r2:
+    bgp.as: 65001
+    bgp.rr: True
+  e1:
+    bgp.as: 65000
+  e2:
+    bgp.as: 65001
+
+links:
+- r1:
+    bgp.local_as: 666
+  r2:
+    bgp.local_as: 666
+  bgp.advertise: True
+- r1-e1
+- r2-e2