MOS transistors having localized stressors for improving carrier mobility are provided. Embodiments of the invention comprise a gate electrode formed over a substrate, a carrier channel region in the substrate under the gate electrode, and source/drain regions on either side of the carrier channel region. The source/drain regions include an embedded stressor having a lattice spacing different from the substrate. In a preferred embodiment, the substrate is silicon and the embedded stressor is SiGe or SiC. An epitaxy process that includes using HCl gas selectively forms a stressor layer within the crystalline source/drain regions and not on polycrystalline regions of the structure. A preferred epitaxy process dispenses with the source/drain hard mask required of conventional methods. The embedded SiGe stressor applies a compressive strain to a transistor channel region. In another embodiment, the embedded stressor comprises SiC, and it applies a tensile strain to the transistor channel region.