Local oxidation of thin cobaltdisilicide layers (10–30 nm) allows patterning with distances between silicide pads as small as 70 nm. The epitaxial silicide layers were grown by molecular beam allotaxy (MBA) on Si(100) substrates. They were characterized by TEM, RBS and sheet resistance measurements showing good crystal quality and excellent thermal stability up to 1200°C. Similar to the well established technology for local oxidation of silicon (LOCOS), the silicide layer was caped by 20 nm SiO2 followed by 300 nm of Si3N4. The nitride was patterned by optical lithography and dry etching. During dry oxidation at temperatures ranging from 900°C to 1000°C SiO2 is formed on the unprotected areas of the silicide. The Co atoms diffuse from the SiO2/CoSi2 interface to the CoSi2/Si interface to form CoSi2. Near the edges of the nitride mask the silicide layer thins and finally separates. Two metallic pads electrically separated by Si and SiO2 with a gap of 70 nm were produced this way. Monte Carlo simulations of the process revealed that the reason for the separation is stress dependent diffusion due to the stress induced by the nitride mask. The stress dependence of the separation process was experimentally verified using different nitride thicknesses. SEM and TEM studies showed perfect lateral patterning. This patterning process could be used in the fabrication of MOSFET's with ultrashort gatelengths.