diff --git a/qiskit/transpiler/passes/optimization/template_matching/template_substitution.py b/qiskit/transpiler/passes/optimization/template_matching/template_substitution.py
index 1e47acec8b5d..9eab25363f65 100644
--- a/qiskit/transpiler/passes/optimization/template_matching/template_substitution.py
+++ b/qiskit/transpiler/passes/optimization/template_matching/template_substitution.py
@@ -14,9 +14,9 @@
 Template matching substitution, given a list of maximal matches it substitutes
 them in circuit and creates a new optimized dag version of the circuit.
 """
+import collections
 import copy
-import random
-import string
+import itertools
 
 from qiskit.circuit import Parameter, ParameterExpression
 from qiskit.dagcircuit.dagcircuit import DAGCircuit
@@ -502,42 +502,44 @@ def _attempt_bind(self, template_sublist, circuit_sublist):
         from sympy.parsing.sympy_parser import parse_expr
 
         circuit_params, template_params = [], []
-        circ_param_str = ""
-        sub_params = {}
+        # Set of all parameter names that are present in the circuits to be optimised.
+        circuit_params_set = set()
 
         template_dag_dep = copy.deepcopy(self.template_dag_dep)
 
-        # add parameters from circuit to circuit_params, as well as a
-        # string containing parameters to check for duplicates from the template
+        # add parameters from circuit to circuit_params
         for idx, t_idx in enumerate(template_sublist):
             qc_idx = circuit_sublist[idx]
-            circuit_params += self.circuit_dag_dep.get_node(qc_idx).op.params
-            for param_exp in self.circuit_dag_dep.get_node(qc_idx).op.params:
-                if isinstance(param_exp, ParameterExpression):
-                    circ_param_str += str(param_exp)
+            parameters = self.circuit_dag_dep.get_node(qc_idx).op.params
+            circuit_params += parameters
+            for parameter in parameters:
+                if isinstance(parameter, ParameterExpression):
+                    circuit_params_set.update(x.name for x in parameter.parameters)
+
+        _dummy_counter = itertools.count()
+
+        def dummy_parameter():
+            # Strictly not _guaranteed_ to avoid naming clashes, but if someone's calling their
+            # parameters this then that's their own fault.
+            return Parameter(f"_qiskit_template_dummy_{next(_dummy_counter)}")
+
+        # Substitutions for parameters that have clashing names between the input circuits and the
+        # defined templates.
+        template_clash_substitutions = collections.defaultdict(dummy_parameter)
 
-        # add parameters from template to template_params, as well as replace
-        # node parameters that have duplicate names in the circuit params
-        # create a dict of sub_params to substitute remaining nodes not in
-        # the template sublist
+        # add parameters from template to template_params, replacing parameters with names that
+        # clash with those in the circuit.
         for idx, t_idx in enumerate(template_sublist):
             node = template_dag_dep.get_node(t_idx)
             sub_node_params = []
             for t_param_exp in node.op.params:
                 if isinstance(t_param_exp, ParameterExpression):
                     for t_param in t_param_exp.parameters:
-                        if t_param.name in circ_param_str:
-                            new_param_name = "".join(
-                                random.choice(string.ascii_lowercase) for i in range(8)
-                            )
-                            sub_params[t_param] = Parameter(new_param_name)
-                            t_param_exp = t_param_exp.assign(t_param, sub_params[t_param])
-                            sub_node_params.append(t_param_exp)
-                            template_params.append(t_param_exp)
-                        else:
-                            sub_node_params.append(t_param_exp)
-                            template_params.append(t_param_exp)
-
+                        if t_param.name in circuit_params_set:
+                            new_param = template_clash_substitutions[t_param.name]
+                            t_param_exp = t_param_exp.assign(t_param, new_param)
+                sub_node_params.append(t_param_exp)
+                template_params.append(t_param_exp)
             node.op.params = sub_node_params
 
         for node in template_dag_dep.get_nodes():
@@ -545,14 +547,11 @@ def _attempt_bind(self, template_sublist, circuit_sublist):
             for param_exp in node.op.params:
                 if isinstance(param_exp, ParameterExpression):
                     for param in param_exp.parameters:
-                        if param in sub_params:
-                            sub_node_params.append(
-                                param_exp.subs(sub_params)
-                            )  # prolly need to specify exact entry
-                        else:
-                            sub_node_params.append(param_exp)
-                else:
-                    sub_node_params.append(param_exp)
+                        if param.name in template_clash_substitutions:
+                            param_exp = param_exp.assign(
+                                param, template_clash_substitutions[param.name]
+                            )
+                sub_node_params.append(param_exp)
 
             node.op.params = sub_node_params