Packaged air conditioners also known as "self-contained air conditioners" consist of a compressor, evaporator coil and an air handler all housed in a single-boxed cabinet. Typically they sit outside the home on the ground or on the roof. Like the split system, the Package units distribute conditioned air to the space through ducting which is usually hidden in the ceiling or wall of the building.

Packaged heating or cooling units can be thought of as a bigger version of a window air conditioner. However, unlike window air conditioners or PTAC units, it has a higher cooling and/or heating capacity and can cool an entire house or a commercial building. The nominal capacities of a packaged air conditioner or heat pump range from 2 Ton to 5 Ton (for residential applications and mobile homes) and from 5 Ton to 30 Ton (for commercial applications). These units do come factory-assembled but require skilled technicians to install them properly and ensure optimal performance.

There are several variations to packaged systems (similar to the split systems) which can provide more functional and efficient heating depending on the installation location. The four variations are defined below (all of which provide a cooling source but vary in the way they provide heat):

•  Packaged Air Conditioning System - where limited warmth is required, an electrical strip heater can be added.
•  Packaged Heat Pump System - where more frequent heating is required, uses heat pump technology to heat your home.
•  Packaged Gas Heat System - where heating is year-round, combines an air conditioner with gas-powered furnace performance.
•  Packaged Dual Fuel System - where the most efficient source of heating is needed, contains a heat pump, capable of heating and cooling in mildly cold temperatures, as well as a gas furnace for the more severe temperatures. This type of packaged system optimizes the heating source for the conditions.