I have installed latest Xcode 7 beta 2 version, when I am trying to run the application in iOS 7.1 Simulator its giving this error message:

The iOS 7.1 simulator runtime is not available.

Unable to open liblaunch_sim.dylib. Try reinstalling Xcode or the simulator runtime.

Could you please let me know how to resolve this error?

You can't (At least in an Official way).

Taken from Xcode Beta 2 Documentation (Page 7).

Hope it helps.

EDIT SEPT - 2015:

Thanks Cœur for the info, now you can use previous versions of ios simulator.

Took a lot of browsing but I finally found a solution that worked for me (tried Gend's answer but didn't work). Execute the following lines:

sudo mv "/Library/Developer/CoreSimulator/Profiles/Runtimes/iOS 7.1.simruntime/Contents/Resources/RuntimeRoot/usr/lib/system/host/liblaunch_sim.dylib"{,.bak}

sudo ln -sf "/Applications/Xcode-beta.app/Contents/Developer/Platforms/iPhoneSimulator.platform/Developer/SDKs/iPhoneSimulator.sdk/usr/lib/system/host/liblaunch_sim.dylib" "/Library/Developer/CoreSimulator/Profiles/Runtimes/iOS 7.1.simruntime/Contents/Resources/RuntimeRoot/usr/lib/system/host/liblaunch_sim.dylib"

Source: https://gist.github.com/leecade/83b4e710d7c741152527

Gend

First, find the target file:

/Applications/Xcode-beta.app/Contents/Developer/Platforms/iPhoneSimulator.platform/Developer/SDKs/iPhoneSimulator.sdk/usr/lib/system/host/liblaunch_sim.dylib

You need make backup liblaunch_sim.dylib (Just in case). Second, copied to destination (Remember to backup)

/Library/Developer/CoreSimulator/Profiles/Runtimes/iOS 7.1.simruntime/Contents/Resources/RuntimeRoot/usr/lib/system/host/liblaunch_sim.dylib

And If need it to: iOS 8.1.simruntime iOS 8.2.simruntime iOS 8.3.simruntime All done.

Hope it helps.

When you are using sudo command and terminal says: "Command not found" Then use command like below.

sudo su (enter)

$ sudo mv "/Library/Developer/CoreSimulator/Profiles/Runtimes/iOS 8.1.simruntime/Contents/Resources/RuntimeRoot/usr/lib/system/host/liblaunch_sim.dylib"{,.bak}(enter)

$ sudo mv "/Library/Developer/CoreSimulator/Profiles/Runtimes/iOS 7.1.simruntime/Contents/Resources/RuntimeRoot/usr/lib/system/host/liblaunch_sim.dylib"{,.bak}(enter)

$ sudo ln -sf "/Applications/Xcode-beta.app/Contents/Developer/Platforms/iPhoneSimulator.platform/Developer/SDKs/iPhoneSimulator.sdk/usr/lib/system/host/liblaunch_sim.dylib" "/Library/Developer/CoreSimulator/Profiles/Runtimes/iOS 8.1.simruntime/Contents/Resources/RuntimeRoot/usr/lib/system/host/liblaunch_sim.dylib"(enter)

$ sudo ln -sf "/Applications/Xcode-beta.app/Contents/Developer/Platforms/iPhoneSimulator.platform/Developer/SDKs/iPhoneSimulator.sdk/usr/lib/system/host/liblaunch_sim.dylib" "/Library/Developer/CoreSimulator/Profiles/Runtimes/iOS 7.1.simruntime/Contents/Resources/RuntimeRoot/usr/lib/system/host/liblaunch_sim.dylib"(enter) Exit(enter)

Now relaunch Xcode 7 if open earlier.you will be able to run simulators.

In Xcode 7 beta 6 this seems to be possible now.

http://adcdownload.apple.com/Developer_Tools/Xcode_7_beta_6/Xcode_7_beta_6_Release_Notes.pdf