To provide a method for manufacturing a thin film transistor and a display device using a small number of masks, a thin film transistor is manufactured in such a manner that a first conductive film, an insulating film, a semiconductor film, an impurity semiconductor film, and a second conductive film are stacked; then, a resist mask is formed thereover; first etching is performed to form a thin-film stack body; second etching in which the first conductive film is side-etched is performed by dry-etching to form a gate electrode layer; and a source electrode, a drain electrode, and the like are formed. Before the dry etching, it is preferred that at least a side surface of the etched semiconductor film be oxidized.