A package with self-forming insulating walls includes a tray for supporting a food item, a flap joined to the tray along a fold line, and an insulating microwave material overlying at least a portion of the tray and at least a portion of the flap. The insulating microwave material may be joined to the flap. The insulating microwave material may include a microwave energy interactive material supported on a first polymer film layer, a moisture-containing layer joined to the microwave energy interactive material, and a second polymer film layer joined to the moisture-containing layer in a predetermined pattern, thereby defining a plurality of expandable cells between the moisture-containing layer and the second polymer film layer.