A first Group III nitride compound semiconductor layer 31 is etched, to thereby form an island-like structure such as a dot-like, stripe-shaped, or grid-like structure, so as to provide a trench/mesa such that layer different from the first Group III nitride compound semiconductor layer 31 is exposed at the bottom portion of the trench. Thus, a second Group III nitride compound layer 32 can be epitaxially grown, laterally, with a top surface of the mesa and a sidewall/sidewalls of the trench serving as a nucleus, to thereby bury the trench and also grow the layer in the vertical direction. In this case, propagation of threading dislocations contained in the first Group III nitride compound semiconductor layer 31 can be prevented in the upper portion of the second Group III nitride compound semiconductor 32 that is formed through lateral epitaxial growth. Etching may be performed until a cavity portion is provided in the substrate. The layer serving as a nucleus of ELO may be doped with indium (In) having an atomic radius greater than that of gallium (Ga) serving as a predominant element. The first semiconductor layer may be a multi-component layer containing a plurality of numbers of repetitions of a unit of a buffer layer and a single-crystal layer.