An IGFET with a gate electrode and a source contact in a trench is disclosed. The IGFET includes a trench with opposing sidewalls and a bottom surface in a semiconductor substrate, a gate insulator on the bottom surface, a gate electrode on the gate insulator, a source contact on the bottom surface, insulative spacers between the gate electrode, the source contact and the sidewalls, and a source and drain adjacent to the bottom surface. A method of forming an IGFET includes forming a trench with first and second opposing sidewalls and a bottom surface in a substrate, forming disposable spacers on the bottom surface, forming a gate insulator material on the bottom surface between the disposable spacers, depositing a gate electrode material on the gate insulator material and disposable spacers, polishing the gate electrode material and then anisotropically etching a lateral portion of the gate electrode material and gate insulator material to form the gate electrode and gate insulator, removing the disposable spacers, forming a first insulative spacer adjacent to the first sidewall, a second insulative spacer adjacent to the gate electrode and second sidewall, and a third insulative spacer adjacent to the gate electrode such that a contact portion of the bottom surface between the first and third insulative spacers is exposed, forming a source and drain in the substrate and adjacent to the bottom surface, and forming source and drain contacts such that the source contact is electrically coupled to the source at the contact portion of the bottom surface and the drain contact is electrically coupled to the drain at the top surface of the substrate. Advantageously, the source contact overlaps the trench, thereby improving packing density.