A semiconductor device and method of manufacture thereof wherein a PMOS source/drain region of a transistor within the substrate includes a first strained layer in the PMOS source/drain region and a first capping layer in contact with the first strained layer. Further, the semiconductor device and method provide for an NMOS source/drain region of a transistor within the substrate including a second strained layer in the NMOS source/drain region and a second capping layer in contact with the second strained layer.