A semiconductor device includes a substrate, first and second fins protruding from the substrate, and first and second source/drain (S/D) features over the first and second fins respectively. The semiconductor device further includes an isolation feature over the substrate and disposed between the first and second S/D features, and a dielectric layer disposed on sidewalls of the first and second S/D features and on sidewalls of the isolation feature. A top portion of the isolation feature extends above the dielectric layer.