A MOSFET structure and method of fabricating the structure incorporates a multi-layer sidewall spacer to suppress parasitic overlap capacitance between the gate conductor and the source/drain extensions without degrading drive current and, thereby, effecting overall MOSFET performance. The multi-layer sidewall spacer is formed with a gap layer having a dielectric constant equal to one and a permeable low-K (e.g., less than 3.5) dielectric layer. Alternatively, the multi-layer sidewall spacer is formed with a first L-shaped dielectric layer having a permittivity value of less than approximately three and a second dielectric layer. The multi-layer spacer may also have a third nitride or oxide spacer layer. This third spacer layer provides increased structural integrity.