This paper considers finite-time formation control problem for a group of nonholonomic mobile robots. The desired formation trajectory is represented by a virtual dynamic leader whose states are available to only a subset of the followers and the followers have only local interaction. First of all, a continuous distributed finite-time observer is proposed for each follower to estimate the leader's states in a finite time. Then, a continuous distributed cooperative finite-time tracking control law is designed for each mobile robot. Rigorous proof shows that the group of mobile robots converge to the desired geometric formation pattern in finite time. At the same time, all the robots can track the desired formation trajectory in finite time. Simulation example illustrates the effectiveness of our method. Copyright © 2012 John Wiley & Sons, Ltd.