The time‐varying output group formation‐containment tracking (TVOGFCT) problem of discrete‐time heterogeneous multi‐agent system (MAS) is investigated in this paper. Assuming the MAS consists of multiple tracking leaders, formation leaders, and followers, and all the agents are divided into several groups. Firstly, to estimate the convex combination of tracking leaders in the same group, the distributed observers are designed for the formation leaders, and the observer‐based formation tracking protocols are also presented to make formation leaders realize the desired time‐varying group formation while tracking the convex combination of tracking leaders. Then, two types of observers are proposed to estimate the convex combination of tracking information and formation functions, based on which the containment tracking protocols are designed for the followers of each group. By using output regulation theory and Lyapunov theory, it is illustrated that the designed protocols can make the MAS realize TVOGFCT. Finally, the simulation results prove the correctness of the theoretical analysis.