A semiconductor fabrication process includes forming a transistor gate overlying an SOI wafer having a semiconductor top layer over a buried oxide layer (BOX) over a semiconductor substrate. Source/drain trenches, disposed on either side of the gate, are etched into the BOX layer. Source/drain structures are formed within the trenches. A depth of the source/drain structures is greater than the thickness of the top silicon layer and an upper surface of the source/drain structures coincides approximately with the transistor channel whereby vertical overlap between the source/drain structures and the gate is negligible. The trenches preferably extend through the BOX layer to expose a portion of the silicon substrate. The source/drain structures are preferably formed epitaxially and possibly in two stages including an oxygen rich stage and an oxygen free stage. A thermally anneal between the two epitaxial stages will form an isolation dielectric between the source/drain structure and the substrate.