diff --git a/lib/vagrant/errors.rb b/lib/vagrant/errors.rb
index a90c0b21b..22ea2e09e 100644
--- a/lib/vagrant/errors.rb
+++ b/lib/vagrant/errors.rb
@@ -336,6 +336,10 @@ module Vagrant
       error_key(:provider_not_found)
     end
 
+    class PluginGemError < VagrantError
+      error_key(:plugin_gem_error)
+    end
+
     class PluginLoadError < VagrantError
       status_code(81)
       error_key(:plugin_load_error)
diff --git a/plugins/commands/plugin/action/install_gem.rb b/plugins/commands/plugin/action/install_gem.rb
index 1abd010cf..71be71b0c 100644
--- a/plugins/commands/plugin/action/install_gem.rb
+++ b/plugins/commands/plugin/action/install_gem.rb
@@ -17,23 +17,10 @@ module VagrantPlugins
         def call(env)
           plugin_name = env[:plugin_name]
 
-          # First, install the gem
-          begin
-            # Set the GEM_HOME so that it is installed into our local gems path
-            old_gem_home = ENV["GEM_HOME"]
-            ENV["GEM_HOME"] = env[:gems_path].to_s
-            p ENV["GEM_PATH"]
-            @logger.debug("Set GEM_HOME to: #{ENV["GEM_HOME"]}")
-
-            @logger.info("Installing gem: #{plugin_name}")
-            env[:ui].info(
-              I18n.t("vagrant.commands.plugin.installing", :name => plugin_name))
-            Gem.clear_paths
-            Gem::GemRunner.new.run(
-              ["install", plugin_name, "--no-ri", "--no-rdoc"])
-          ensure
-            ENV["GEM_HOME"] = old_gem_home
-          end
+          # Install the gem
+          env[:ui].info(I18n.t("vagrant.commands.plugin.installing",
+                               :name => plugin_name))
+          env[:gem_helper].cli(["install", plugin_name, "--no-ri", "--no-rdoc"])
 
           # Mark that we installed the gem
           env[:plugin_state_file].add_plugin(plugin_name)
diff --git a/plugins/commands/plugin/command/install.rb b/plugins/commands/plugin/command/install.rb
index ffa137672..dc5b2fa6b 100644
--- a/plugins/commands/plugin/command/install.rb
+++ b/plugins/commands/plugin/command/install.rb
@@ -16,6 +16,7 @@ module VagrantPlugins
 
           # Install the gem
           @env.action_runner.run(Action.action_install, {
+            :gem_helper => GemHelper.new(@env.gems_path),
             :plugin_name => argv[0],
             :plugin_state_file => StateFile.new(@env.data_dir.join("plugins.json"))
           })
diff --git a/plugins/commands/plugin/gem_helper.rb b/plugins/commands/plugin/gem_helper.rb
new file mode 100644
index 000000000..d7fd81b49
--- /dev/null
+++ b/plugins/commands/plugin/gem_helper.rb
@@ -0,0 +1,47 @@
+require "rubygems"
+require "rubygems/gem_runner"
+
+require "log4r"
+
+module VagrantPlugins
+  module CommandPlugin
+    # This class provides methods to help with calling out to the
+    # `gem` command but using the RubyGems API.
+    class GemHelper
+      def initialize(gem_home)
+        @gem_home = gem_home.to_s
+        @logger   = Log4r::Logger.new("vagrant::plugins::plugincommand::gemhelper")
+      end
+
+      def cli(argv)
+        # Initialize the UI to use for RubyGems. This allows us to capture
+        # the stdout/stderr without actually going to the real STDOUT/STDERR.
+        # The final "false" here tells RubyGems we're not a TTY, so don't
+        # ask us things.
+        gem_ui = Gem::StreamUI.new(StringIO.new, StringIO.new, StringIO.new, false)
+
+        # Set the GEM_HOME so that it is installed into our local gems path
+        old_gem_home = ENV["GEM_HOME"]
+        ENV["GEM_HOME"] = @gem_home
+        @logger.debug("Set GEM_HOME to: #{ENV["GEM_HOME"]}")
+        @logger.info("Calling gem with argv: #{argv.inspect}")
+        Gem.clear_paths
+        Gem::DefaultUserInteraction.use_ui(gem_ui) do
+          Gem::GemRunner.new.run(argv)
+        end
+      rescue Gem::SystemExitException => e
+        # This means that something forced an exit within RubyGems.
+        # We capture this to check whether it succeeded or not by
+        # checking the "exit_code"
+        raise Vagrant::Errors::PluginGemError, :output => gem_ui.errs.string.chomp if e != 0
+      ensure
+        # Restore the old GEM_HOME
+        ENV["GEM_HOME"] = old_gem_home
+
+        # Log the output properly
+        @logger.debug("Gem STDOUT: #{gem_ui.outs.string}")
+        @logger.debug("Gem STDERR: #{gem_ui.errs.string}")
+      end
+    end
+  end
+end
diff --git a/plugins/commands/plugin/plugin.rb b/plugins/commands/plugin/plugin.rb
index c7cf5e24f..db9763319 100644
--- a/plugins/commands/plugin/plugin.rb
+++ b/plugins/commands/plugin/plugin.rb
@@ -16,6 +16,7 @@ DESC
     end
 
     autoload :Action, File.expand_path("../action", __FILE__)
+    autoload :GemHelper, File.expand_path("../gem_helper", __FILE__)
     autoload :StateFile, File.expand_path("../state_file", __FILE__)
   end
 end
diff --git a/templates/locales/en.yml b/templates/locales/en.yml
index 1ce45e7e6..214bbd1a3 100644
--- a/templates/locales/en.yml
+++ b/templates/locales/en.yml
@@ -165,6 +165,11 @@ en:
       no_env: |-
         A Vagrant environment is required to run this command. Run `vagrant init`
         to set one up.
+      plugin_gem_error: |-
+        An error occurred within RubyGems, the underlying system used to
+        manage Vagrant plugins. The output of the errors are shown below:
+
+        %{output}
       plugin_load_error: |-
         The plugin "%{plugin}" could not be found. Please make sure that it is
         properly installed via `vagrant gem`.