Your Mac was unable to communicate with your Apple Watch.

I found a suggestion on the web (appletoolbox.com) that this was a Handoff problem, and following their instructions was able to solve the problem.

Here's what I did:

1) On your iPhone (mine is on iOS 13.7), go to Settings | General | AirPlay & Handoff. If the "Handoff" setting is on, turn it off, wait for a few moments, then turn it back on.

2) Go to the Apple Watch app. On the main screen go to General, then look for the "Enable Handoff" setting. If it is on, turn it off for a few moments, then re-enable it.

3) Finally, on your Mac go to System Preferences | General and look for the "Allow Handoff between this Mac and your iCloud devices" setting. Again, if it is on, turn if off for a few moments, then re-enable it.

After doing this I went back to the Security & Privacy tab in System Preferences and tried to enable the "Use your Apple Watch to unlock apps and your Mac" setting. It immediately worked.

I might be stating the obvious, but if you found any of the settings in 3 steps above were "off", that may have been your problem as well...

This was the solution for me. I use lastpass as password manager, so "KeyChain" was switched off.

When I switched it on, it works like a charm. I did not see this in any instructions about enabling this feature.

I had the same issue with my Series 6 watch and experienced it when I download the first version of Big Sur. The only was I was able to solve it was erasing all contents and settings on my watch and re-setting up from a back up. This somehow got it realize that I actually have a watch paired to my Apple ID and it got my Mac to recognize my watch to unlock it.

Very frustrating - with the upgrade to Big Sur on both my iMac Pro and MacBook Pro, I had this issue suddenly occur. I followed the above steps and because of the iCloud sharing, deleting files on the iMac Pro wiped out those for the MacBook Pro too - not unexpected. But the MacBook Pro simply let me check the box for unlock via the Apple Watch and now it is happy. The iMac Pro, not happy at all. I also toggled the KeyChain as suggested below but that did nothing. Cleared PRAM as as well, and still nothing. Having seen the note from TigerGTO, I have stopped short of a full scape and pave to reinstall iOS.

Clearly there is a bug rather deep in something that is affecting some systems but not others. My iMac Pro and MacBook Pro are essentially twins so far as core software goes. Very odd

After updating to Big Sur on my iMac the communication was no longer possible. It still works with my work MBP that I also updated to Big Sur. Kinda confused here. I also tried on/off the Handoff on the Watch, same result. I think we have to wait for a patch for everyone to be happily unlocking our macs with our watch.

I tried all of the listed solutions. What finally worked for me was unpairing my Series 5 Cellular Apple Watch with my iPhone 11 Pro and then pairing and syncing the Apple Watch from backup. After that, selecting the option to: Use your Apple Watch to unlock apps and your Mac failed on the first try and then worked flawlessly on the second try. Hopefully it will continue to work in the future.

after following mark__t's steps from stoska992 rebooting and redoing the steps several times i was still getting the error.

i eventually unpaired then paired the watch and on the first attempt pairing worked.

Possibly something on the watch needed a clearing out.

Thanks mark__t thanks stoska992

I tried these steps. it failed, then allowed me to enable it, but it hasn't worked since. now when I tried to enable it, it errors with 'unable to communicate with watch' - anything else I should try?

I tried all the solutions listed here and finally the thing that worked for me was signing out of iCloud on my mac and signing back in. Sort of a pain to get everything synced up again, but it did work!

Same issue for me. I've tried removing AutoUnlock from Keychain. Enabling/Re-enabling handoff on all devices. Apple Support thought it was a brilliant idea to upgrade to Big Sur. That did nothing (of course).

Next to just getting rid of it all... I guess I'll just wait. How many people have the time and money to spend $4k just to have things not work properly? Not me.

Moral of the story... never upgrade if things are working properly. You'll likely regret it.

Interesting - and this worked. The MacBook Pro simply had to have the setting checked again, and it worked without issue as it had before. My iMac Pro seemed to take a long time to connect after the box was checked and my password entered, but now it is working.

I don't know if simply uncaring and re-pairing with the watch would have done the trick, but all of the above with the un-pair and re-pair worked!!

Mark's added note to Steps 9 and 10 is important: Search for "ltk.plist and pairing-records.plist file in the Library folder" and delete them. Don't simply delete the files in the AutoUnlock folder. Following all of the steps above with the added step, then rebooting, worked for me.

Thanks.

I unpaired the watch for a previous problem. Am hoping to avoid doing that, since it wiped the settings from the watch. Not as painful as resetting the iPhone to factory settings, but still a pain.

I spent too much time with Apple Tech support yesterday. They had me turn off Screen Sharing. When I restarted the iMac, I lost their connection, of course. But I saw something that I had not seen for quite some time: 'When restarting, cannot unlock using AppleWatch'. That gave me hope. But when I put the computer asleep, the watch did not unlock when restarting.

Then they had me zap the PRAM. That did not help either.

I am going to try calling Apple Tech Support back today.

I had the issue, got passed up to at least level three of Apple support. She had me log out of my Apple ID, iCloud account, then log back in again. Magically, I could go to Security & Privacy to check "Use your Apple Watch to unlock apps and your Mac." It was scary logging out of my iCloud account, but I cannot see any downsides. Everything works after I log back in. It just feels dangerous when you have over 36,000 photos you don't want to lose. And there would be no way to import them into this computer.

It all works fine now for me.

I somehow was able to restore my AppleWatch. Of course, when I got through tech support, it loaded right back up without a hitch. While we were waiting for it to load, he asked me if I had done other things such as those in the posting above, which I had.

While we were waiting for the watch to reload, we got disconnected and I was not able to get back in touch with him.

I was then able to sign in with my watch on my Mac. This morning, it did not work to sign in on my Mac. This afternoon it does. That is pretty much how reliable it was before all of this started. Sometimes it works.....