The invention discloses a flash memory and a manufacturing method thereof. The method includes the following steps: providing a substrate,. Forming an active area and a shallow trench isolation area on the substrate, and forming a first oxide layer, a floating gate layer, a dielectric layer and a control gate layer on the active area in sequence; forming a silicon nitride layer which includes a first groove on the control gate layer; forming a second oxide layer on the control gate layer exposed in the first groove, and forming a second groove; forming a source electrode and a source terminal conductive trench on the active area exposed at the bottom of the second groove and the shallow trench isolation area adjacent to the active area respectively; forming third oxide layers in the first groove and the second groove, and removing the residual silicon nitride layer, the redundant control gate layer, the redundant dielectric layer, the redundant floating gate layer and the redundant first oxide layer to form a gate; and forming a gate oxide layer wall, a drain electrode and a contact window in sequence.