The present invention discloses a semiconductor device and method of manufacturing the same, comprising: forming an insulating isolation layer on a substrate; forming an insulating isolation layer trench in the insulating isolation layer; forming an active region layer in the insulating isolation layer trench; and forming a semiconductor device structure in and above the active region layer, wherein the carrier mobility of the active region layer is higher than that of the substrate. In accordance with the semiconductor device and the manufacturing method thereof in the present invention, an active region formed of a material different from that of the substrate is used, the carrier mobility in the channel region is enhanced, thereby the device response speed is substantially improved and the device performance is enhanced greatly. Furthermore, unlike the existing STI manufacturing process, in the present invention a STI is formed first, and then filling is performed to form an active region, to avoid the problem of generation of holes in the STI and improve the device reliability.