Xcode 8 | iOS 10 simulator "Error returned in reply: Connection invalid"
Even I was getting the same error. Issue in my case was I was working on xcode 7.3 and its simulator was open, later on I closed xcode 7 and opened xcode 8 and tried running app and got the above error.
I guess its happening because of both the simulator were open, it got solved when I closed my older simulator. Seem to be some problem while xcode 8 was trying to establish connection with simulator.
You just follow these steps to remove this error it's working fine in my side and i hope these steps work to you also just try it.
i)Remove multiple xcode versions.ii)Quit all Xcode and simulators. iii)Only one version you opened.iv)Go to Xcode -> Preferences
v)Go to Location 
vi) Set proper version for command line tools (your Xcode version)
vii)click on Derived Data 
viii)Then go to Derived data and delete that folder. see below image
ix) Click on Simulator reset content settings and just quit xcode and simulator and open clear and build the xcode and run it.
Without deleting "Derived data" folder
The same rules as in the past apply to switching between Xcode 8 and Xcode 9:
- Quit Xcode, Instruments, Simulator.app, and Console
- xcode-select the version you want to work with
- Start the version of Xcode you want to use
If these steps don't resolve the problem for you, you can repeat the steps above > but after #2 add "sudo killall -9 com.apple.CoreSimulator.CoreSimulatorService".