Semiconductor device and manufacturing method thereof

A semiconductor device in an embodiment includes a substrate and a transistor. The transistor includes a source layer, a drain layer, a gate insulation film, a gate electrode, a contact plug and a first epitaxial layer. The source layer and the drain layer are provided in surface regions of the substrate, and contain an impurity. The gate insulation film is provided on the substrate between the source layer and the drain layer. The gate electrode is provided on the gate insulation film. The contact plug is provided so as to protrude to the source layer or the drain layer downward of a surface of the substrate. The first epitaxial layer is provided between the contact plug and the source layer or drain layer, and contains both the impurity and carbon.