A method for forming an improved trench isolation having a conformal liner oxide and rounded top and bottom corners in the trench was achieved. The conformal liner oxide improves the CVD gap-filling capabilities for these deep submicron wide trenches, and the rounded corners improve the electrical characteristics of the devices in the adjacent device areas. After etching trenches with vertical sidewalls in the silicon substrate, a two-step oxidation process is used to form the conformal liner oxide. A first oxidation step using a low-oxygen flow rate and a low temperature (about 850 to 920.degree. C.) is used to achieve rounded bottom corners. A second oxidation step at a low-oxygen flow rate and a higher temperature (about 1000 to 1150.degree. C.) is used to achieve rounded top corners. The two-step process also results in a more conformal liner oxide. The trenches are then filled with a CVD oxide and polished or etched back to an oxidation-barrier layer/etch-stop layer over the device areas to complete the trench isolation.