An optical sensor packaging system and method can include: providing an embedded substrate, the embedded substrate including an embedded chip coupled to a redistribution pad with a redistribution line connecting therebetween; mounting an optical sensor to the embedded substrate, the optical sensor including a photo sensitive material formed on a photo sensitive area of an active optical side of the optical sensor; wire-bonding the optical sensor to the embedded substrate with a first bond wire connected from the active optical side to the redistribution pad; and encapsulating the optical sensor, the first bond wire, and the photo sensitive material with an over-mold, the over-mold formed with a top surface co-planar to a surface of the photo sensitive material, the over-mold forming a vertically extended boarder around the photo sensitive material and around the optical sensing area, and the over-mold formed above the first bond wire.