The characteristics of a semiconductor device using a nitride semiconductor are improved.A trench which penetrates an insulating film and a barrier layer and reaches inside of a channel layer is formed by etching the channel layer, the barrier layer, and the insulating film which are formed over a substrate. Then, an epitaxial regrowth layer is formed over a bottom surface and a side surface of the trench by using an epitaxial growth method. It is possible to reduce roughness (unevenness) of a crystal surface due to etching and the like of the bottom surface and the side surface of the trench by forming the epitaxial regrowth layer in this way. A channel is formed in an interface between the epitaxial regrowth layer and a gate insulating film, so that mobility of carriers improves and on-resistance of an element decreases.