The threshold voltage of a MOSFET is usually defined as the gate voltage where an inversion layer forms at the interface between the insulating layer (oxide) and the substrate (body) of the transistor. The creation of this layer is described next. In an n-MOSFET the substrate of the transistor is composed of p-type silicon (see doping (semiconductor)), which has positively charged mobile holes as carriers.

When a positive voltage is applied on the gate, an electric field causes the holes to be repelled from the interface, creating a depletion region containing immobile negatively charged acceptor ions. A further increase in the gate voltage eventually causes electrons to appear at the interface, in what is called an inversion layer, or channel. Historically the gate voltage at which the electron density at the interface is the same as the hole density in the neutral bulk material is called the threshold voltage.

Practically speaking the threshold voltage is the voltage at which there are sufficient electrons in the inversion layer to make a low resistance conducting path between the MOSFET source and drain. In the figures, the source and drain are labeled n+ to indicate heavily doped n-regions. The depletion layer dopant is labeled NA− to indicate that the ions in the depletion layer are negatively charged and there are very few holes.

In the bulk the number of holes p = NA making the bulk charge neutral. If the gate voltage is below the threshold voltage, the transistor is turned off and ideally there is no current from the drain to the source of the transistor. In fact, there is a current even for gate biases below threshold (subthreshold leakage) current, although it is small and varies exponentially with gate bias.

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