A semiconductor device including a nonvolatile memory cell and a field effect transistor together is improved in performance. In a method of manufacturing a semiconductor device, a hydrogen-containing insulating film is formed before heat treatment of a semiconductor wafer, the hydrogen-containing insulating film covering a gate electrode and agate insulating film in a region that will have a memory cell therein, and exposing a region that will have therein a MISFET configuring a peripheral circuit. Consequently, hydrogen in the hydrogen-containing insulating film is diffused into an interface between the gate insulating film and the semiconductor substrate, and thereby a defect at the interface is selectively repaired.