Self-limiting cavities are formed within a crystalline semiconductor substrate and beneath a stack of semiconductor layers used to form a nanosheet transistor device. Inner ends of the cavities merge beneath the stack while the outer ends thereof adjoin isolation regions within the substrate. The cavities are filled with electrically insulating material to provide bottom device isolation. Source/drain regions are grown in vertical trenches extending through the stack of semiconductor layers following formation of dielectric inner spacers. The bottom ends of the trenches adjoin the electrically insulating material within the cavities.