A semiconductor device with enhanced reliability in which a gate electrode for a trench-gate field effect transistor is formed through a gate insulating film in a trench made in a semiconductor substrate. The upper surface of the gate electrode is in a lower position than the upper surface of the semiconductor substrate in an area adjacent to the trench. A sidewall insulating film is formed over the gate electrode and over the sidewall of the trench. The gate electrode and the sidewall insulating film are covered by an insulating film as an interlayer insulating film.