A method of manufacture of an integrated circuit packaging system includes: forming a package lead having a retention structure around a perimeter of the package lead with a first concave surface, a ridge, and a second concave surface; forming a die attach paddle adjacent the package lead and having an another retention structure around a perimeter of the die attach paddle with an another first concave surface, an another ridge, and an another second concave surface; attaching an integrated circuit die to the die attach paddle; connecting a conductive connector to the integrated circuit die and the package lead; and applying an encapsulation over the integrated circuit die, the encapsulation conformed to the retention structure and exposing a portion of the package lead.