Packaging is a key issue for the effective working of an iron-gallium (Galfenol) nanowire acoustic sensor for underwater applications. The nanowire acoustic sensor incorporates cilia-like nanowires made of galfenol, a magnetostrictive material, which responds by changing magnetic flux flowing through it due to bending stress induced by the incoming acoustic waves. This stress induced change in the magnetic flux density is detected by a GMR sensor. An effective package should provide a suitably protective environment to these nanowires, while allowing sound waves to reach the nanowires with a minimum level of attenuation. A bio-inspired MEMS package has been designed, analogous to a human-ear cochlea for the nanowire acoustic sensor. In this paper, the process sequence for fabrication of the package is presented. Unlike other microphones, the nanoacoustic sensor has been enclosed in a cavity to allow free movement of the nanowires in a fluid medium. The package also ensures resisting ingression of sea water and salt ions to prevent the corrosion of sensor components. The effect of package material on sensor performance was investigated by conducting experiments on acoustic impedance and attenuation characteristics, and salt water absorption properties. The package filled with silicone oil and molded with polydimethylsiloxane (PDMS) is observed to outperform other packages at all frequencies by minimizing attenuation of the acoustic waves.