A new isolation structure which is named as nano-trenched local oxidation of silicon (NTLOCOS) is proposed. In NTLOCOS process, island polysilicon grains (IPG) are used for making very slender trenches in silicoin substrate. Preliminary results have shown fast oxidation rate due to enchanced surface area exposed to an oxidizing ambient, high volume ratio, and less field oxide thinning effect. For process optimization, two-dimensional simulation in NTLOCOS with focusing on the effect of nano-trench width is discussed.