An integrated circuit packaging system includes: a base integrated circuit package having a base integrated circuit on a base substrate thereof; a base barrier on the base substrate adjacent a base perimeter of the base substrate; a stack substrate over the base substrate, the stack substrate having a stack substrate aperture with the stack substrate having an inter-substrate connector thereon; a connector underfill through the stack substrate aperture encapsulating the inter-substrate connector, overflow of the connector underfill prevented by the base barrier; and a cavity formed of the stack substrate, the base integrated circuit package, and the connector underfill, the cavity horizontally offset from the base barrier.