The message "Your Mac was unable to communicate with your Apple Watch" Keeps appearing when I try to set up my Watch to unlock my MacBook Pro

That fixed me! Thanks JUK!

Nothing else worked, except the 'Disable' and 'Enable' iCloud Keychain on iPhone. Works flawlessly now. Dumb fix, but a fix nonetheless...

Thanks, I turned off/on the handoff on the mbp general settings, and was able to enable the unlock w/ watch setting immediately afterwards.

I tried EVERYTHING else and this one actually did the trick! Thanks!!!

I managed to fixed it by turning off the bluetooth on iPhone (this should make your Watch connect to the cloud) then checked the "Allow your Apple Watch to unlock your Mac"

Yep - changing the password in keychain access worked for me - it had fallen out of sync with my login to the mac and the knock on effect was apple watch login failed. Nice tip, thanks.

Just had this problem after updating to macOS 10.12.4, iOS 10.3 and watchOS 3.2. Toggling handoff off and on on the phone was all it took.

Oh my gosh, this is the only thing that fixed it for me. I tried all the other suggestions and nothing worked. So bizarre but thanks so much for the help!

Thank you so very much for this. Hours of my life wasted, but I am content that I have finally been able to arrive at solution. Thanks to you.

You shouldn't have to switch off Unlock with iPhone to get it to work. Both Unlock with iPhone and Allow Apple Watch to Unlock your Mac have worked just fine for me at the same time.

Thanks - I tried many solutions to no avail, until I followed your solution and it worked.

Thank you so much! It actually did resolve the issue!

This worked for me, after I got a new series 3 and received this error. Hope it helps someone else.