In this study, a new neural observer-based dynamic surface control scheme is proposed for the path following of underactuated unmanned surface vessels in the presence of input saturation and time-varying external disturbance. The dynamic surface control technique is augmented by a robust adaptive radial basis function neural network and a nonlinear neural disturbance observer. Radial basis function neural network is employed to deal with system uncertainties, and the nonlinear neural disturbance observer is developed to compensate for the unknown compound disturbance that contains the input saturation approximation error and the external disturbance. Moreover, the stringent known boundary requirement of the unknown disturbance constraint is eliminated with the proposed nonlinear neural disturbance observer. Meanwhile, to deal with the non-smooth saturation nonlinearity, a new parametric hyperbolic tangent function approximation model with arbitrary prescribed precision is constructed, which results in the transient performance improvement for the path following control system. Stability analysis shows that all the signals in the closed-loop system are guaranteed to be ultimately bounded. Comparative simulation results further demonstrate the effectiveness of the proposed control scheme.