.ssh/config: "Bad configuration option: UseKeychain" on Mac OS Sierra 10.12.6

Try to specify another option, namely IgnoreUnknown like below:

Host *
  IgnoreUnknown UseKeychain
  UseKeychain yes

You can find more info about this here.

If you already have an IgnoreUnknown value, use comma separated values

Host *
  IgnoreUnknown AddKeysToAgent,UseKeychain
  AddKeysToAgent yes
  UseKeychain yes

If you have multiple Host configs that use the UseKeychain option, make sure to put

Host *
  IgnoreUnknown UseKeychain

before the first host that uses the the option, e.g. put it at the top of the file.

If you do not want to (or cannot) modify your SSH configuration file, you can also pass this option when connecting on the command line:

ssh -o IgnoreUnknown=UseKeychain my-host

The accepted answer helped me but did not completely solve my problem because I had multiple options that were bad. Here is an example of what it might look like if you have this issue:

Host *
  IgnoreUnknown AddKeysToAgent,UseKeychain
  AddKeysToAgent yes
  UseKeychain yes
  IdentityFile ~/.ssh/id_rsa