How to fix Xcode "DTAssetProviderService could not start.." error?

If you want the slow solution, you can reinstall Xcode 7.3.1 by downloading it from https://developer.apple.com/download/more/.

It worked for me and now my Simulator is able to start again without getting the error.

The issue is discussed in depth here: How to fix Xcode "DTAssetProviderService could not start.." error?

This seems to be a major bug. Until Apple fixes it, you can work around it:

• Build app
• The app will still install on the simulator, even with the error
• Launch the app manually on the simulator
• Go to Xcode
• Click Debug > Attach to Process > Your App Name

That will enable Xcode debugging features and allow your app to run in simulator. Definitely not ideal, but hopefully you can use this until a real solution comes out.