A power transistor having high breakdown voltage and low on-state resistance includes a vertical field effect transistor in a semiconductor substrate having a plurality of source, channel, drift and drain regions therein. A trench having a bottom in the drift region and opposing sidewalls which extend adjacent the drift, channel and source regions is also provided in the substrate, at a face thereof. The trench preferably includes an insulated gate electrode therein for modulating the conductivity of the channel and drift regions in response to the application of a turn-on gate bias. The insulated gate electrode includes an electrically conductive gate in the trench and an insulating region which lines a sidewall of the trench adjacent the channel and drift regions. The insulating region has a nonuniform cross-sectional area between the trench sidewall and the gate which enhances the forward voltage blocking capability of the transistor by inhibiting the occurrence of high electric field crowding at the bottom of the trench. The thickness of the insulating region is preferably greater than 1500 .ANG. along the portion of the sidewall which extends adjacent the drift region and less than 750 .ANG. along the portion of the sidewall which extends adjacent the channel region. To provide low on-state resistance, the drift region is also nonuniformly doped to have a linearly graded doping profile which decreases from greater than about 1.times.10.sup.17 cm.sup.-3 to less than about 5.times.10.sup.-16 cm.sup.-3 in a direction from the drain region to the channel region.