A package structure and a formation method of a package structure are provided. The method includes forming a redistribution structure over a carrier substrate and disposing a semiconductor die over the redistribution structure. The method also includes stacking an interposer substrate over the redistribution structure. The interposer substrate extends across edges of the semiconductor die. The method further includes disposing one or more device elements over the interposer substrate. In addition, the method includes forming a protective layer to surround the semiconductor die.