Deep optical photometric data on the NGC 7538 region were collected and combined with archival data sets from the Chandra, 2MASS and Spitzer surveys to generate a new catalogue of young stellar objects (YSOs) including those not showing infrared excess emission. This new catalogue is complete down to 0.8M_{sun}_. The nature of the YSOs associated with the NGC 7538 region and their spatial distribution are used to study the star-formation process and the resultant mass function (MF) in the region. Out of the 419 YSOs, ~91 per cent have ages between 0.1 and 2.5Myr and ~86 per cent have masses between 0.5 and 3.5M_{sun}_, as derived by the spectral energy distribution fitting analysis. Around 24, 62 and 2 per cent of these YSOs are classified to be class I, class II and class III sources, respectively. The X-ray activities for the class I, class II and class III objects are not significantly different from each other. This result implies that the enhanced X-ray surface flux due to the increase in the rotation rate may be compensated for by the decrease in the stellar surface area during the pre-main-sequence evolution. Our analysis shows that the O3V type high-mass star IRS 6 may have triggered the formation of young low-mass stars up to a radial distance of 3pc. The MF shows a turn-off at around 1.5M_{sun}_ and the value of its slope {Gamma} in the mass range 1.5<M/M_{sun}_<6 is -1.76+/-0.24, which is steeper than the Salpeter value.