A semiconductor device for reducing junction leakage current and mitigating the narrow width effect, and a fabrication method thereof, are provided. The semiconductor device includes a semiconductor substrate in which an active region and an isolation region including a trench are formed, a spacer which is formed on both sidewalls of the trench, a channel stop impurity region which is self-aligned by the spacer and locally formed only at the lower portion of the isolation region, an isolation insulating layer in which the trench is buried, and a gate pattern which is formed on the isolation insulating layer and the active region. When the channel stop impurity region is formed only at the lower portion of the isolation region, isolation characteristics between unit cells can be improved, and also, a junction leakage current can be reduced. Further, the present invention can reduce a narrow width effect, in which a threshold voltage rapidly decreases as a channel width becomes narrower, owing to the formation of the channel stop impurity region on the edges of the active region.