The capacitive micromachined ultrasonic transducer (CMUT) has inherent advantages, such as larger bandwidth and monolithic integration capability with electronics, when compared to the piezoelectric transducer. The most significant shortcoming of the device is the trade-off between input and output sensitivities. Adequate receive sensitivity requires an electric field intensity on the order of 105 V/m, which can be achieved by sub-micron gap heights. However, a small gap limits the device stroke and, consequently, the maximum output pressure. This paper addresses this problem by proposing a CMUT with a vertical cavity. The membrane of the device has a piston part that is surrounded by the sidewalls of a vertical cylinder formed in the substrate. The fringing electric field pulls the piston in the vertical direction; hence, the gap height remains fixed, which alleviates the hard limit on device stroke. The performance of the proposed device is compared to that of the conventional CMUT by theoretical and analytical methods, and a micro-fabrication method is devised. Additionally, a millimeter-scale device has been manufactured and tested as a proof of concept.