A method for fabricating a semiconductor device includes forming a pad nitride layer that exposes an isolation region over a cell region of a semiconductor substrate; forming a trench in the isolation region of the semiconductor substrate; forming an isolation layer within the trench; etching an active region of the semiconductor substrate by a certain depth to form a recessed isolation region; etching the isolation layer by a certain depth to form a recessed isolation region; depositing a gate metal layer in the recessed active region and the recessed isolation region to form a gate of a cell transistor; forming an insulation layer over an upper portion of the gate; removing the pad nitride layer to expose a region of the semiconductor substrate to be formed with a contact plug; and depositing a conductive layer in the region of the semiconductor substrate to form a contact plug.