diff --git a/.github/workflows/test.yml b/.github/workflows/test.yml
index bc4e14a95..b33ddc047 100644
--- a/.github/workflows/test.yml
+++ b/.github/workflows/test.yml
@@ -112,6 +112,39 @@ jobs:
       if: startsWith(matrix.os, 'windows') && startsWith(matrix.ruby, 'jruby')
       run: gem install sassc
 
+  testLatestRubygemsVersion:
+    name: "Test rubygems input set to latest upgrades the default RubyGems version"
+    runs-on: ubuntu-latest
+    steps:
+    - uses: actions/checkout@v2
+    - uses: ./
+      with:
+        ruby-version: 2.6
+        rubygems: latest
+    - run: ruby -e "exit(Gem.rubygems_version > Gem::Version.new('3.0.3'))"
+
+  testFixedRubygemsVersionUpgrades:
+    name: "Test rubygems input set to a fixed version upgrades RubyGems to that version if the default is older"
+    runs-on: ubuntu-latest
+    steps:
+    - uses: actions/checkout@v2
+    - uses: ./
+      with:
+        ruby-version: 2.6
+        rubygems: 3.2.3
+    - run: gem --version | grep -F "3.2.3"
+
+  testFixedRubygemsVersionNoop:
+    name: "Test rubygems input set to a fixed version noops if the default is newer"
+    runs-on: ubuntu-latest
+    steps:
+    - uses: actions/checkout@v2
+    - uses: ./
+      with:
+        ruby-version: 3.1
+        rubygems: 3.2.3
+    - run: gem --version | grep -F "3.3.3"
+
   testExactBundlerVersion:
     name: "Test with an exact Bundler version"
     runs-on: ubuntu-latest
diff --git a/README.md b/README.md
index 2b71d9a35..a0538131c 100644
--- a/README.md
+++ b/README.md
@@ -139,6 +139,18 @@ and the [condition and expression syntax](https://help.github.com/en/actions/ref
 The `working-directory` input can be set to resolve `.ruby-version`, `.tool-versions` and `Gemfile.lock`
 if they are not at the root of the repository, see [action.yml](action.yml) for details.
 
+## RubyGems
+
+By default, the default RubyGems version that comes with each Ruby is used.
+However, users can optionally customize the RubyGems version that they want by
+setting the `rubygems` input.
+
+See [action.yml](action.yml) for more details about the `rubygems` input.
+
+If you're running into `ArgumentError: wrong number of arguments (given 4,
+expected 1)` errors with a stacktrace including Psych and RubyGems entries, you
+should be able to fix them by setting `rubygems: 3.0.0` or higher.
+
 ### Bundler
 
 By default, if there is a `Gemfile.lock` file (or `$BUNDLE_GEMFILE.lock` or `gems.locked`) with a `BUNDLED WITH` section,
diff --git a/action.yml b/action.yml
index 14732f8a5..01a1b5831 100644
--- a/action.yml
+++ b/action.yml
@@ -9,6 +9,13 @@ inputs:
     description: 'Engine and version to use, see the syntax in the README. Reads from .ruby-version or .tool-versions if unset.'
     required: false
     default: 'default'
+  rubygems:
+    description: |
+      The version of RubyGems to use. Either 'default', 'latest', or a version number (e.g., 3.3.5).
+      For 'default', no action is taken and the version of RubyGems that comes with Ruby by default is used.
+      For 'latest', `gem update --system` is run to update to the latest RubyGems version.
+      Similarly, if a version number is given, `gem update --system <version>` is run to update to that version of RubyGems, as long as that version is newer than the one provided by default.
+      Defaults to 'default'.
   bundler:
     description: |
       The version of Bundler to install. Either 'none', 'latest', 'Gemfile.lock', or a version number (e.g., 1, 2, 2.1.4).
diff --git a/dist/index.js b/dist/index.js
index 56e93f843..2f38272ed 100644
--- a/dist/index.js
+++ b/dist/index.js
@@ -58953,6 +58953,48 @@ function getLatestHeadBuildURL(platform, engine, version) {
 }
 
 
+/***/ }),
+
+/***/ 160:
+/***/ ((__unused_webpack_module, __webpack_exports__, __nccwpck_require__) => {
+
+"use strict";
+__nccwpck_require__.r(__webpack_exports__);
+/* harmony export */ __nccwpck_require__.d(__webpack_exports__, {
+/* harmony export */   "rubygemsUpdate": () => (/* binding */ rubygemsUpdate)
+/* harmony export */ });
+const path = __nccwpck_require__(5622)
+const exec = __nccwpck_require__(1514)
+const semver = __nccwpck_require__(5911)
+
+async function rubygemsUpdate(rubygemsVersionInput, rubyPrefix) {
+  const gem = path.join(rubyPrefix, 'bin', 'gem')
+
+  let gemVersion = ''
+
+  await exec.exec(gem, ['--version'], {
+    listeners: {
+      stdout: (data) => (gemVersion += data.toString()),
+    }
+  });
+
+  gemVersion = semver.coerce(gemVersion.trim())
+  console.log(`Default RubyGems version is ${gemVersion}`)
+
+  if (rubygemsVersionInput === 'latest') {
+    console.log('Updating RubyGems to latest version')
+    await exec.exec(gem, ['update', '--system'])
+  } else if (semver.gt(rubygemsVersionInput, gemVersion)) {
+    console.log(`Updating RubyGems to ${rubygemsVersionInput}`)
+    await exec.exec(gem, ['update', '--system', rubygemsVersionInput])
+  } else {
+    console.log(`Skipping RubyGems update because the given version (${rubygemsVersionInput}) is not newer than the default version (${gemVersion})`)
+  }
+
+  return true
+}
+
+
 /***/ }),
 
 /***/ 7223:
@@ -59566,12 +59608,14 @@ const fs = __nccwpck_require__(5747)
 const path = __nccwpck_require__(5622)
 const core = __nccwpck_require__(2186)
 const common = __nccwpck_require__(4717)
+const rubygems = __nccwpck_require__(160)
 const bundler = __nccwpck_require__(1641)
 
 const windows = common.windows
 
 const inputDefaults = {
   'ruby-version': 'default',
+  'rubygems': 'default',
   'bundler': 'default',
   'bundler-cache': 'true',
   'working-directory': '.',
@@ -59623,6 +59667,11 @@ async function setupRuby(options = {}) {
 
   const rubyPrefix = await installer.install(platform, engine, version)
 
+  if (inputs['rubygems'] !== 'default') {
+    await common.measure('Updating RubyGems', async () =>
+      rubygems.rubygemsUpdate(inputs['rubygems'], rubyPrefix))
+  }
+
   // When setup-ruby is used by other actions, this allows code in them to run
   // before 'bundle install'.  Installed dependencies may require additional
   // libraries & headers, build tools, etc.
diff --git a/index.js b/index.js
index a94fa3c58..419d71857 100644
--- a/index.js
+++ b/index.js
@@ -3,12 +3,14 @@ const fs = require('fs')
 const path = require('path')
 const core = require('@actions/core')
 const common = require('./common')
+const rubygems = require('./rubygems')
 const bundler = require('./bundler')
 
 const windows = common.windows
 
 const inputDefaults = {
   'ruby-version': 'default',
+  'rubygems': 'default',
   'bundler': 'default',
   'bundler-cache': 'true',
   'working-directory': '.',
@@ -60,6 +62,11 @@ export async function setupRuby(options = {}) {
 
   const rubyPrefix = await installer.install(platform, engine, version)
 
+  if (inputs['rubygems'] !== 'default') {
+    await common.measure('Updating RubyGems', async () =>
+      rubygems.rubygemsUpdate(inputs['rubygems'], rubyPrefix))
+  }
+
   // When setup-ruby is used by other actions, this allows code in them to run
   // before 'bundle install'.  Installed dependencies may require additional
   // libraries & headers, build tools, etc.
diff --git a/package.json b/package.json
index 915464c23..26783d1a2 100644
--- a/package.json
+++ b/package.json
@@ -26,7 +26,8 @@
     "@actions/core": "^1.4.0",
     "@actions/exec": "^1.1.0",
     "@actions/io": "^1.1.1",
-    "@actions/tool-cache": "^1.7.1"
+    "@actions/tool-cache": "^1.7.1",
+    "semver": "^6.1.0"
   },
   "devDependencies": {
     "@vercel/ncc": "^0.31.1"
diff --git a/rubygems.js b/rubygems.js
new file mode 100644
index 000000000..8b77bd7f3
--- /dev/null
+++ b/rubygems.js
@@ -0,0 +1,30 @@
+const path = require('path')
+const exec = require('@actions/exec')
+const semver = require('semver')
+
+export async function rubygemsUpdate(rubygemsVersionInput, rubyPrefix) {
+  const gem = path.join(rubyPrefix, 'bin', 'gem')
+
+  let gemVersion = ''
+
+  await exec.exec(gem, ['--version'], {
+    listeners: {
+      stdout: (data) => (gemVersion += data.toString()),
+    }
+  });
+
+  gemVersion = semver.coerce(gemVersion.trim())
+  console.log(`Default RubyGems version is ${gemVersion}`)
+
+  if (rubygemsVersionInput === 'latest') {
+    console.log('Updating RubyGems to latest version')
+    await exec.exec(gem, ['update', '--system'])
+  } else if (semver.gt(rubygemsVersionInput, gemVersion)) {
+    console.log(`Updating RubyGems to ${rubygemsVersionInput}`)
+    await exec.exec(gem, ['update', '--system', rubygemsVersionInput])
+  } else {
+    console.log(`Skipping RubyGems update because the given version (${rubygemsVersionInput}) is not newer than the default version (${gemVersion})`)
+  }
+
+  return true
+}