A method for forming an image sensor package is provided. An image sensor chip is formed over a package substrate. A protection layer is formed overlying the image sensor chip. The protection layer has a planar top surface and a bottom surface lining and contacting structures under the protection layer. An opening is formed into the protection layer and spaced around a periphery of the image sensor chip. A light shielding material is filled in the opening to form an on-wafer shield structure having a sidewall directly contact the protection layer.