A semiconductor device using a CESL (contact etch stop layer) to induce strain in, for example, a CMOS transistor channel, and a method for fabricating such a device. A stress-producing CESL, tensile in an n-channel device and compressive in a p-channel device, is formed over the device gate structure as a discontinuous layer. This may be done, for example, by depositing an appropriate CESL, then forming an ILD layer, and simultaneously reducing the ILD layer and the CESL to a desired level. The discontinuity preferably exposes the gate electrode, or the metal contact region formed on it, if present. The upper boundary of the CESL may be further reduced, however, to position it below the upper boundary of the gate electrode.