Does the iPhone simulator in Xcode support Bluetooth Low Energy?

The simulator does support Bluetooth Low Energy (4.0) according to this appnote from Apple. The only problem is that even if you have a computer with BLE inside, you will not be able to use the simulator together with it, because (I think) you occupy the availability on BLE for other devices to discover your computer, thereby restricting the functionality of the Mac.

So if you go get yourself a BLE USB dongle you will be able to use it in simulator.

EDIT: Adding information from @JoeShaw:

Unfortunately it appears as though Core Bluetooth support has been dropped from the simulator for iOS 7. Reference: doubleencore.com/2013/09/whats-new-in-bluetooth-le-ios-7. In addition, the linked technote seems to have been removed.

I have been using the simulator to test BLE apps - but you need to be on OSX 10.7. As Wilhelmsen mentioned, you also need a BLE USB dongle. In addition, you need to set an NVRAM setting:

$sudo nvram bluetoothHostControllerSwitchBehavior="never"

See this Technical Note from Apple for more details on using the simulator to test BLE apps: http://developer.apple.com/library/ios/#technotes/tn2295/_index.html

According to http://www.doubleencore.com/2013/09/whats-new-in-bluetooth-le-ios-7/, Core Bluetooth support has been dropped from the simulator as of iOS 7. I haven't figured out why yet, but it means you will need to test on real hardware in the future.

It also appears as though Apple has removed Tech Note 2295, as I get redirected when I hit the URL.