A method of manufacture of an integrated circuit packaging system includes: forming an isolated contact having a contact protrusion, the contact protrusion having a lower protrusion surface, an upper protrusion surface, and a protrusion sidewall; forming a die paddle, adjacent to the isolated contact, having a die paddle protrusion, the die paddle protrusion having a lower die protrusion surface, an upper die protrusion surface, and a die protrusion sidewall; depositing a contact pad on the contact protrusion; depositing a die paddle pad on the die paddle protrusion; coupling an integrated circuit die to the contact protrusion; and molding an encapsulation on the integrated circuit die.