Disclosed are a semiconductor device including a stepped gate electrode and a method of fabricating the semiconductor device. The semiconductor device according to an exemplary embodiment of the present disclosure includes: a semiconductor substrate having a structure including a plurality of epitaxial layers and including an under-cut region formed in a part of a Schottky layer in an upper most part thereof; a cap layer, a first nitride layer and a second nitride layer sequentially formed on the semiconductor substrate to form a stepped gate insulating layer pattern; and a stepped gate electrode formed by depositing a heat-resistant metal through the gate insulating layer pattern, wherein the under-cut region includes an air-cavity formed between the gate electrode and the Schottky layer.