A package structure includes first/second/third package components, a thermal interface material (TIM) structure overlying the first package component opposite to the second package component, and a heat dissipating component disposed on the third package component and thermally coupled to the first package component through the TIM structure. The first package component includes semiconductor dies and an insulating encapsulation encapsulating the semiconductor dies, the second package component is interposed between the first and third package components, and the semiconductor dies are electrically coupled to the third package component via the second package component. The TIM structure includes a dielectric dam and thermally conductive members including a conductive material, disposed within areas confined by the dielectric dam, and overlying the semiconductor dies. A manufacturing method of a package structure is also provided.