This paper investigates a formation tracking problem of underactuated surface vessels (USVs) with collision avoidance and input saturation. All nonlinearities induced by model uncertainties and disturbances are assumed to be unknown. A design of observer based on neural network is used to recover the velocity data and unknown uncertainties and disturbances. Distributed control laws are designed based on artificial potential functions (APFs), the observer, and a backstepping technique. The APFs combined with a practical category are used to avoid collision. Additional controllers are employed to deal with the input saturation and underactuated problems without affecting the capability of collision avoidance. The stability of formation control system is proved by using the Lyapunov's direct method. Simulation results are performed to illustrate the effectiveness of the proposed strategy.