A method of self-aligned spacer formation is described. According to one embodiment of the invention, a substrate processing method is provided, where the method includes forming a sacrificial film over a substrate, creating a pattern in the sacrificial film, conformally depositing a first spacer layer over the patterned sacrificial film, removing horizontal portions of the first spacer layer while substantially leaving vertical portions of the first spacer layer, and selectively depositing a second spacer layer on the first spacer layer.