A transistor having an oxide semiconductor film in a channel formation region and a manufacturing method thereof are disclosed. The transistor is formed by the steps of: forming a base insulating over a substrate; forming an oxide semiconductor film over the base insulating film; forming a conductive film over the oxide semiconductor film; processing the conductive film to form a source electrode and a drain electrode; processing the oxide semiconductor film; forming a gate insulating film over the source electrode, the drain electrode, and the oxide semiconductor film; and forming a gate electrode over the gate insulating film. The aforementioned manufacturing method allows the formation of a transistor in which a side surface of the oxide semiconductor film is not in direct contact with bottom surfaces of the source electrode and the drain electrode, which contributes to the extremely small leak current of the transistor.