A base insulating film is formed over a substrate. A first oxide semiconductor film is formed over the base insulating film, and then first heat treatment is performed to form a second oxide semiconductor film. Then, selective etching is performed to form a third oxide semiconductor film. An insulating film is formed over the first insulating film and the third oxide semiconductor film. A surface of the insulating film is polished to expose a surface of the third oxide semiconductor film, so that a sidewall insulating film is formed in contact with at least a side surface of the third oxide semiconductor film. Then, a source electrode and a drain electrode are formed over the sidewall insulating film and the third oxide semiconductor film. A gate insulating film and a gate electrode are formed.