Semiconductor device and method of manufacturing the same

To improve performance of a semiconductor device. Over a semiconductor substrate, a gate electrode is formed via a first insulating film for a gate insulating film, and a second insulating film extends from over a side wall of the gate electrode to over the semiconductor substrate. Over the semiconductor substrate in a part exposed from the second insulating film, a semiconductor layer, which is an epitaxial layer for source/drain, is formed. The second insulating film has a part extending over the side wall of the gate electrode and a part extending over the semiconductor substrate, and a part of the semiconductor layer lies over the second insulating film in the part extending over the semiconductor substrate.