The invention is related to a MOS transistor and its fabrication method to reduce short-channel effects. Existing process has the problem of high complexity and high cost to reduce short-channel effects by using epitaxial technique to produce an elevated source and drain structure. In the invention, the MOS transistor, fabricated on a silicon substrate after an isolation module is finished, includes a gate stack, a gate sidewall spacer, and source and drain areas. The silicon substrate has a groove and the gate stack is formed in the groove. And the process for the MOS transistor includes the following steps: forming the groove; carrying out well implantation, anti-punchthrough implantation and threshold-voltage adjustment implantation; forming the gate stack in the groove which comprising patterning the gate electrode; carrying lightly doped drain implantation and halo implantation; forming the gate sidewall spacer; carrying source and drain implantation to get the source and drain areas; forming a metal silicide layer on the source and drain areas.