An improvement is achieved in the performance of a semiconductor device. Over the main surface of a semiconductor substrate for the n-type base of an IGBT, an insulating layer is formed. In a trench of the insulating layer, an n-type semiconductor layer is formed over the semiconductor substrate and, on both sides of the semiconductor layer, gate electrodes are formed via gate insulating films. In an upper portion of the semiconductor layer, a p-type semiconductor region for a p-type base and an n+-type semiconductor region for an n-type emitter are formed. Under the gate electrodes, parts of the insulating layer are present. The side surfaces of the gate electrodes opposite to the side surfaces thereof facing the semiconductor layer via the gate insulating films are adjacent to the insulating layer.