diff --git a/pkgs/development/interpreters/ruby/default.nix b/pkgs/development/interpreters/ruby/default.nix
index a53df02f9b9b..4ebc488d9988 100644
--- a/pkgs/development/interpreters/ruby/default.nix
+++ b/pkgs/development/interpreters/ruby/default.nix
@@ -136,6 +136,12 @@ let
           ++ op (stdenv.hostPlatform != stdenv.buildPlatform)
              "--with-baseruby=${buildRuby}";
 
+        preInstall = ''
+          # Ruby installs gems here itself now.
+          mkdir -pv "$out/${passthru.gemPath}"
+          export GEM_HOME="$out/${passthru.gemPath}"
+        '';
+
         installFlags = stdenv.lib.optionalString docSupport "install-doc";
         # Bundler tries to create this directory
         postInstall = ''
@@ -148,7 +154,6 @@ let
           sed -i '/NROFF/d' $out/lib/ruby/*/*/rbconfig.rb
 
           # Bundler tries to create this directory
-          mkdir -pv $out/${passthru.gemPath}
           mkdir -p $out/nix-support
           cat > $out/nix-support/setup-hook <<EOF
           addGemPath() {
diff --git a/pkgs/development/interpreters/ruby/rubygems-src.nix b/pkgs/development/interpreters/ruby/rubygems-src.nix
index 99870e6ba2ca..cb36c96a4c52 100644
--- a/pkgs/development/interpreters/ruby/rubygems-src.nix
+++ b/pkgs/development/interpreters/ruby/rubygems-src.nix
@@ -1,6 +1,6 @@
 { fetchurl
-, version ? "2.6.13"
-, sha256 ? "1j98ww8cz9y4wwshg7p4i4acrmls3ywkyj1nlkh4k3bywwm50hfh"
+, version ? "2.7.6"
+, sha256 ? "1sqy6z1kngq91nxmv1hw4xhw1ycwx9s76hfbpcdlgkm9haji9xv7"
 }:
 fetchurl {
   url = "http://production.cf.rubygems.org/rubygems/rubygems-${version}.tgz";