This paper considers the output feedback guaranteed cost controller design problem for uncertain discrete-time systems. The uncertainty is assumed to be of linear fractional form, unstructured, and is allowed to be time-varying. It is proved that the existence of a guaranteed cost controller is equivalent to the feasibility of a certain linear matrix inequality (LMI), and that a full-order output feedback controller can be constructed in terms of the feasible solution to the LMI. Furthermore, a convex optimization problem is introduced for the selection of a suitable controller minimizing a specified cost bound.