no such file to load -- rubygems (LoadError)

I have a hunch that you have two ruby versions. Please paste the output of following command:

$ which -a ruby

updated regarding to the comment:

Nuke one version and leave only one. I had same problem with two versions looking at different locations for gems. Had me going crazy for few weeks. Put up a bounty here at SO got me same answer I'm giving to you.

All I did was nuke one installation of ruby and left the one managable via ports. I'd suggest doing this:

1. Remove ruby version installed via ports (yum or whatever package manager).
2. Remove ruby version that came with OS (hardcore rm by hand).
3. Install ruby version from ports with different prefix (/usr instead of /usr/local)
4. Reinstall rubygems

I had a similar problem on Ubuntu due to having multiple copies of ruby installed. (1.8 and 1.9.1) Unfortunately I need both of them. The solution is to use:

$ sudo update-alternatives --config ruby
There are 2 choices for the alternative ruby (providing /usr/bin/ruby).

  Selection    Path                Priority   Status
------------------------------------------------------------
* 0            /usr/bin/ruby1.8     50        auto mode
  1            /usr/bin/ruby1.8     50        manual mode
  2            /usr/bin/ruby1.9.1   10        manual mode

Press enter to keep the current choice[*], or type selection number: 2
update-alternatives: using /usr/bin/ruby1.9.1 to provide /usr/bin/ruby (ruby) in manual mode.

After doing that bundle install succeeded.

OK, I am a Ruby noob, but I did get this fixed slightly differently than the answers here, so hopefully this helps someone else (tl;dr: I used RVM to switch the system Ruby version to the same one expected by rubygems).

First off, listing all Rubies as mentioned by Eimantas was a great starting point:

> which -a ruby
/opt/local/bin/ruby
/Users/Brian/.rvm/rubies/ruby-1.9.2-p290/bin/ruby
/Users/Brian/.rvm/bin/ruby
/usr/bin/ruby
/opt/local/bin/ruby

The default Ruby instance in use by the system appeared to be 1.8.7:

> ruby -v
ruby 1.8.7 (2010-06-23 patchlevel 299) [i686-darwin10]

while the version in use by Rubygems was the 1.9.2 version managed by RVM:

> gem env | grep 'RUBY EXECUTABLE'
  - RUBY EXECUTABLE: /Users/Brian/.rvm/rubies/ruby-1.9.2-p290/bin/ruby

So that was definitely the issue. I don't actively use Ruby myself (this is simply a dependency of a build system script I'm trying to run) so I didn't care which version was active for other purposes. Since rubygems expected the 1.9.2 that was already managed by RVM, I simply used RVM to switch the system to use the 1.9.2 version as the default:

> rvm use 1.9.2
Using /Users/Brian/.rvm/gems/ruby-1.9.2-p290

> ruby -v
ruby 1.9.2p290 (2011-07-09 revision 32553) [x86_64-darwin11.3.0]

After doing that my "no such file" issue went away and my script started working.

I would just like to add that in my case rubygems wasn't installed.

Running sudo apt-get install rubygems solved the issue!

Try starting the project with:

./script/server

instead of script/server if you are using ruby 1.9.2 (from strange inability to require config/boot after upgrading to ruby 1.9.2)