The increasing demand for higher performance of ULSI circuits requires aggressive shrinkage of device feature sizes in accordance with Moore's law. Plasma processing plays an important role in achieving fine patterns with anisotropic features in metal-oxide-semiconductor field-effect transistors (MOSFETs). This article comprehensively addresses the negative aspect of plasma processingplasma-induced damage (PID). PID naturally not only modifies the surface morphology of materials but also degrades the performance and reliability of MOSFETs as a result of defect generation in the materials. Three key mechanisms of PID, i.e., physical, electrical, and photon-irradiation interactions, are overviewed in terms of modeling, characterization techniques, and experimental evidence reported so far. In addition, some of the emerging topicscontrol of parameter variability in ULSI circuits caused by PID and recovery of PIDare discussed as future perspectives.