A normally-off AlGaN/GaN MOS heterojunction field-effect transistor (MOS-HFET) with a recessed gate structure formed by selective area regrowth is demonstrated. The fabricated MOS-HFET exhibits a threshold voltage of 1.7 V with an improved hysteresis of 0.5 V as compared with a device fabricated by a conventional dry etching process. An analysis of capacitance–voltage (C–V) characteristics reveals that the dry etching process increases interface state density and introduces an additional discrete trap. The use of the selective area regrowth technique effectively suppresses such degradation, avoiding the MOS interface from being exposed to dry etching. The results presented in this paper indicate that the selective area regrowth technique is promising for the fabrication of normally-off AlGaN/GaN MOS-HFETs.