A semiconductor device in which selectivity in epitaxial growth is improved. There is provided a semiconductor device comprising a gate electrode formed over an Si substrate, which is a semiconductor substrate, with a gate insulating film therebetween and an insulating layer formed over sides of the gate electrode and containing a halogen element. With this semiconductor device, a silicon nitride film which contains the halogen element is formed over the sides of the gate electrode when an SiGe layer is formed over the Si substrate. Therefore, the SiGe layer epitaxial-grows over the Si substrate with high selectivity. As a result, an OFF-state leakage current which flows between, for example, the gate electrode and source/drain regions is suppressed and a manufacturing process suitable for actual mass production is established.