Embodiment of the present invention provides a method of forming transistors such as narrow channel transistors. The method includes creating a transistor region in a substrate; the transistor region being separated from rest of the substrate, by one or more shallow trench isolation (STI) regions formed in the substrate, to include a channel region, a source region, and a drain region; the STI regions having a height higher than the transistor region of the substrate; and the channel region having a gate stack on top thereof; forming spacers at sidewalls of the STI regions above the transistor region; creating recesses in the source region and the drain region with the spacers preserving at least a portion of material of the substrate underneath the spacers along sidewalls of the STI regions; and epitaxially growing source and drain of the transistor in the recesses.