A semiconductor device includes a semiconductor layer of a first conductivity type having a main surface at which a trench is formed, a gate insulating layer formed along a side wall of the trench, a gate electrode embedded in the trench with the gate insulating layer interposed therebetween and having an upper surface located below the main surface of the semiconductor layer, a second conductivity type region formed in a surface layer portion of the main surface of the semiconductor layer and facing the gate electrode with the gate insulating layer interposed therebetween, a first conductivity type region formed in a surface layer portion of the second conductivity type region and facing the gate electrode with the gate insulating layer interposed therebetween, and a side wall insulating layer covering the side wall of the trench in a recessed portion defined by the side wall of the trench and the upper surface of the gate electrode.