A high electron mobility transistor (HEMT) device and a method of forming the same are provided. The method includes forming a first III-V compound layer over a substrate. A second III-V compound layer is formed over the first III-V compound layer. The second III-V compound layer has a greater band gap than the first III-V compound layer. A third III-V compound layer is formed over the second III-V compound layer. The third III-V compound layer and the first III-V compound layer comprise a same III-V compound. A passivation layer is formed along a topmost surface and sidewalls of the third III-V compound layer. A fourth III-V compound layer is formed over the second III-V compound layer. The fourth III-V compound layer has a greater band gap than the first III-V compound layer.