An integrated circuit packaging system and method of manufacture thereof includes: a substrate with internal circuitry between a substrate top side, a substrate bottom side, and vertical sides; an integrated circuit coupled to the internal circuitry; a molded package body formed directly on the integrated circuit and the substrate top side of the substrate; and a conductive conformal shield structure applied directly on the molded package body, the vertical sides, and to extend below the substrate bottom side coupled to the internal circuitry.