In a device isolation method for a semiconductor device, after a pad oxide layer and a nitride layer are formed on a semiconductor substrate, the nitride layer located above the device isolation region is removed. An undercut is formed under the nitride by partially etching the pad oxide layer. After a first oxide layer is formed on the exposed substrate and a polysilicon spacer is formed on the sidewalls of the nitride layer, a void is formed in the oxide layer under the nitride layer which is formed on the active region by oxidizing the resultant structure in which the polysilicon spacer is formed at a temperature above 950.degree. C. Thus, good cell definition and stable device isolation can be realized, while solving the typical problem of conventional LOCOS methods by forming the void intentionally in the pad oxide layer thickened by bird's beak punch through.