A package structure and a formation method of a package structure are provided. The method includes forming a recess in a circuit substrate, and the recess has a first sidewall and a second sidewall. The second sidewall is between the first sidewall and a bottommost surface of the circuit substrate, and the second sidewall is steeper than the first sidewall. The method also includes forming a die package, and the die package has a semiconductor die. The method further includes bonding the die package to the circuit substrate through bonding structures such that a portion of the semiconductor die enters the recess of the circuit substrate. In addition, the method includes forming an underfill material to surround the bonding structures and to fill the recess.