diff --git a/CHANGELOG.md b/CHANGELOG.md
index 2eb3c2dc6..654ad6dc2 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,6 +1,13 @@
 ## 1.0.0 (unreleased)
 
-
+  - `vagrant gem` should now be used to install Vagrant plugins that are
+    gems. This installs the gems to a private gem folder that Vagrant adds
+    to its own load path. This isolates Vagrant-related gems from system
+    gems.
+  - Plugin loading no longer happens right when Vagrant is loaded, but when
+    a Vagrant environment is loaded. I don't anticipate this causing any
+    problems but it is a backwards incompatible change should a plugin
+    depend on this (but I don't see any reason why they would).
 
 ## 0.9.6 (February 7, 2012)
 
diff --git a/lib/vagrant.rb b/lib/vagrant.rb
index 867324b55..eb7c86b29 100644
--- a/lib/vagrant.rb
+++ b/lib/vagrant.rb
@@ -50,6 +50,9 @@ require 'i18n'
 # there are issues with ciphers not being properly loaded.
 require 'openssl'
 
+# Always make the version available
+require 'vagrant/version'
+
 module Vagrant
   autoload :Action,        'vagrant/action'
   autoload :Box,           'vagrant/box'
@@ -136,6 +139,7 @@ I18n.load_path << File.expand_path("templates/locales/en.yml", Vagrant.source_ro
 # Register the built-in commands
 Vagrant.commands.register(:box)          { Vagrant::Command::Box }
 Vagrant.commands.register(:destroy)      { Vagrant::Command::Destroy }
+Vagrant.commands.register(:gem)          { Vagrant::Command::Gem }
 Vagrant.commands.register(:halt)         { Vagrant::Command::Halt }
 Vagrant.commands.register(:init)         { Vagrant::Command::Init }
 Vagrant.commands.register(:package)      { Vagrant::Command::Package }
@@ -186,7 +190,3 @@ Vagrant.provisioners.register(:shell)         { Vagrant::Provisioners::Shell }
 Vagrant.config_keys.register(:freebsd) { Vagrant::Guest::FreeBSD::FreeBSDConfig }
 Vagrant.config_keys.register(:linux)   { Vagrant::Guest::Linux::LinuxConfig }
 Vagrant.config_keys.register(:solaris) { Vagrant::Guest::Solaris::SolarisConfig }
-
-# Load the things which must be loaded before anything else.
-require 'vagrant/version'
-Vagrant::Plugin.load!
diff --git a/lib/vagrant/command.rb b/lib/vagrant/command.rb
index 2524a1646..417450d6c 100644
--- a/lib/vagrant/command.rb
+++ b/lib/vagrant/command.rb
@@ -8,6 +8,7 @@ module Vagrant
     autoload :BoxRepackage, 'vagrant/command/box_repackage'
     autoload :BoxList,      'vagrant/command/box_list'
     autoload :Destroy,      'vagrant/command/destroy'
+    autoload :Gem,          'vagrant/command/gem'
     autoload :Halt,         'vagrant/command/halt'
     autoload :Init,         'vagrant/command/init'
     autoload :Package,      'vagrant/command/package'
diff --git a/lib/vagrant/command/gem.rb b/lib/vagrant/command/gem.rb
new file mode 100644
index 000000000..4a135acac
--- /dev/null
+++ b/lib/vagrant/command/gem.rb
@@ -0,0 +1,35 @@
+require "rubygems"
+require "rubygems/gem_runner"
+
+module Vagrant
+  module Command
+    class Gem < Base
+      def execute
+        # Bundler sets up its own custom gem load paths such that our
+        # own gems are never loaded. Therefore, give an error if a user
+        # tries to install gems while within a Bundler-managed environment.
+        if defined?(Bundler)
+          require 'bundler/shared_helpers'
+          if Bundler::SharedHelpers.in_bundle?
+            raise Errors::GemCommandInBundler
+          end
+        end
+
+        # If the user needs some help, we add our own little message at the
+        # top so that they're aware of what `vagrant gem` is doing, really.
+        if @argv.empty? || @argv.include?("-h") || @argv.include?("--help")
+          @env.ui.info(I18n.t("vagrant.commands.gem.help_preamble"),
+                       :prefix => false)
+          puts
+        end
+
+        # We just proxy the arguments onto a real RubyGems command
+        # but change `GEM_HOME` so that the gems are installed into
+        # our own private gem folder.
+        ENV["GEM_HOME"] = @env.gems_path.to_s
+        ::Gem.clear_paths
+        ::Gem::GemRunner.new.run(@argv.dup)
+      end
+    end
+  end
+end
diff --git a/lib/vagrant/environment.rb b/lib/vagrant/environment.rb
index b92c1af5d..d74adb69e 100644
--- a/lib/vagrant/environment.rb
+++ b/lib/vagrant/environment.rb
@@ -11,7 +11,7 @@ module Vagrant
   # defined as basically a folder with a "Vagrantfile." This class allows
   # access to the VMs, CLI, etc. all in the scope of this environment.
   class Environment
-    HOME_SUBDIRS = ["tmp", "boxes"]
+    HOME_SUBDIRS = ["tmp", "boxes", "gems"]
     DEFAULT_VM = :default
     DEFAULT_HOME = "~/.vagrant.d"
 
@@ -34,6 +34,9 @@ module Vagrant
     # The directory where boxes are stored.
     attr_reader :boxes_path
 
+    # The path where the plugins are stored (gems)
+    attr_reader :gems_path
+
     # The path to the default private key
     attr_reader :default_private_key_path
 
@@ -80,10 +83,14 @@ module Vagrant
       setup_home_path
       @tmp_path = @home_path.join("tmp")
       @boxes_path = @home_path.join("boxes")
+      @gems_path  = @home_path.join("gems")
 
       # Setup the default private key
       @default_private_key_path = @home_path.join("insecure_private_key")
       copy_insecure_private_key
+
+      # Load the plugins
+      load_plugins
     end
 
     #---------------------------------------------------------------
@@ -490,5 +497,17 @@ module Vagrant
 
       nil
     end
+
+    # Loads the Vagrant plugins by properly setting up RubyGems so that
+    # our private gem repository is on the path.
+    def load_plugins
+      # Add our private gem path to the gem path and reset the paths
+      # that Rubygems knows about.
+      ENV["GEM_PATH"] = "#{@gems_path}:#{ENV["GEM_PATH"]}"
+      ::Gem.clear_paths
+
+      # Load the plugins
+      Plugin.load!
+    end
   end
 end
diff --git a/lib/vagrant/errors.rb b/lib/vagrant/errors.rb
index 5e928f07b..71b98ceb5 100644
--- a/lib/vagrant/errors.rb
+++ b/lib/vagrant/errors.rb
@@ -173,6 +173,11 @@ module Vagrant
       error_key(:environment_locked)
     end
 
+    class GemCommandInBundler < VagrantError
+      status_code(71)
+      error_key(:gem_command_in_bundler)
+    end
+
     class HomeDirectoryMigrationFailed < VagrantError
       status_code(53)
       error_key(:home_dir_migration_failed)
diff --git a/lib/vagrant/plugin.rb b/lib/vagrant/plugin.rb
index 79f597016..62da439c2 100644
--- a/lib/vagrant/plugin.rb
+++ b/lib/vagrant/plugin.rb
@@ -1,5 +1,7 @@
 require "rubygems"
 
+require "log4r"
+
 module Vagrant
   # Represents a single plugin and also manages loading plugins from
   # RubyGems. If a plugin has a `vagrant_init.rb` file somewhere on its
@@ -7,20 +9,17 @@ module Vagrant
   # (for debugging), the list of loaded plugins is stored in the {plugins}
   # array.
   class Plugin
-    # The array of loaded plugins.
+    # The array of gem specifications that were loaded as plugins.
     @@plugins = []
 
-    # The gemspec of this plugin. This is an actual gemspec object.
-    attr_reader :gemspec
-
-    # The path to the `vagrant_init.rb` file which was loaded for this plugin.
-    attr_reader :file
-
     # Loads all the plugins for Vagrant. Plugins are currently
     # gems which have a "vagrant_init.rb" somewhere on their
     # load path. This file is loaded to kick off the load sequence
     # for that plugin.
     def self.load!
+      logger = Log4r::Logger.new("vagrant::plugin")
+      logger.info("Searching and loading any available plugins...")
+
       # Our version is used for checking dependencies
       our_version = Gem::Version.create(Vagrant::VERSION)
 
@@ -41,10 +40,18 @@ module Vagrant
         specs = Gem::VERSION >= "1.6.0" ? source.latest_specs(true) : source.latest_specs
 
         specs.each do |spec|
+          if @@plugins.include?(spec)
+            logger.debug("Plugin already loaded, not loading again: #{spec.name}")
+            next
+          end
+
           # If this gem depends on Vagrant, verify this is a valid release of
           # Vagrant for this gem to load into.
           vagrant_dep = spec.dependencies.find { |d| d.name == "vagrant" }
-          next if vagrant_dep && !vagrant_dep.requirement.satisfied_by?(our_version)
+          if vagrant_dep && !vagrant_dep.requirement.satisfied_by?(our_version)
+            logger.debug("Plugin Vagrant dependency mismatch: #{spec.name} (#{spec.version})")
+            next
+          end
 
           # Find a vagrant_init.rb to verify if this is a plugin
           file = nil
@@ -55,8 +62,13 @@ module Vagrant
           end
 
           next if !file
-          @@plugins << new(spec, file)
+
+          logger.info("Loading plugin: #{spec.name} (#{spec.version})")
+          @@plugins << spec
+          load file
         end
+
+        logger.info("Loaded #{@@plugins.length} plugins.")
       end
     end
 
@@ -65,15 +77,5 @@ module Vagrant
     #
     # @return [Array]
     def self.plugins; @@plugins; end
-
-    # Initializes a new plugin, given a Gemspec and the path to the
-    # gem's `vagrant_init.rb` file. This should never be called manually.
-    # Instead {load!} creates all the instances.
-    def initialize(spec, file)
-      @gemspec = spec
-      @file = file
-
-      load file
-    end
   end
 end
diff --git a/templates/locales/en.yml b/templates/locales/en.yml
index 95ecb8a71..d870cfd76 100644
--- a/templates/locales/en.yml
+++ b/templates/locales/en.yml
@@ -47,6 +47,12 @@ en:
         may run at any given time to avoid problems with VirtualBox inconsistencies
         occurring. Please wait for the other instance of Vagrant to end and then
         try again.
+      gem_command_in_bundler: |-
+        You cannot run the `vagrant gem` command while in a bundler environment.
+        Bundler messes around quite a bit with the RubyGem load paths and gems
+        installed via `vagrant gem` are excluded by Bundler.
+
+        Instead, please include your Vagrant plugins in your Gemfile itself.
       guest:
         invalid_class: |-
           The specified guest class does not inherit from `Vagrant::Guest::Base`.
@@ -225,6 +231,13 @@ en:
         vm_not_running: "VM is not currently running. Please bring it up to run this command."
       box:
         no_installed_boxes: "There are no installed boxes! Use `vagrant box add` to add some."
+      gem:
+        help_preamble: |-
+          `vagrant gem` is used to install Vagrant plugins via the RubyGems
+          system. In fact, `vagrant gem` is just a frontend to the actual `gem`
+          interface, with the difference being that Vagrant sets up a custom
+          directory where gems are installed so that they are isolated from your
+          system gems.
       init:
         success: |-
           A `Vagrantfile` has been placed in this directory. You are now