diff --git a/lib/ace/mode/ruby.js b/lib/ace/mode/ruby.js
index fc6f675b..1c6d63f6 100644
--- a/lib/ace/mode/ruby.js
+++ b/lib/ace/mode/ruby.js
@@ -3,7 +3,7 @@
  *
  * Copyright (c) 2010, Ajax.org B.V.
  * All rights reserved.
- * 
+ *
  * Redistribution and use in source and binary forms, with or without
  * modification, are permitted provided that the following conditions are met:
  *     * Redistributions of source code must retain the above copyright
@@ -14,7 +14,7 @@
  *     * Neither the name of Ajax.org B.V. nor the
  *       names of its contributors may be used to endorse or promote products
  *       derived from this software without specific prior written permission.
- * 
+ *
  * THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND
  * ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
  * WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
@@ -48,7 +48,7 @@ oop.inherits(Mode, TextMode);
 
 (function() {
 
-       
+
     this.lineCommentStart = "#";
 
     this.getNextLineIndent = function(state, line, tab) {
@@ -60,10 +60,13 @@ oop.inherits(Mode, TextMode);
         if (tokens.length && tokens[tokens.length-1].type == "comment") {
             return indent;
         }
-        
+
         if (state == "start") {
             var match = line.match(/^.*[\{\(\[]\s*$/);
-            if (match) {
+            var startingClassOrMethod = line.match(/^\s*(class|def)\s.*$/);
+            var startingDoBlock = line.match(/.*do(\s*|\s+\|.*\|\s*)$/);
+            var startingConditional = line.match(/^\s*(if|else)\s*/)
+            if (match || startingClassOrMethod || startingDoBlock || startingConditional) {
                 indent += tab;
             }
         }
@@ -72,11 +75,14 @@ oop.inherits(Mode, TextMode);
     };
 
     this.checkOutdent = function(state, line, input) {
-        return this.$outdent.checkOutdent(line, input);
+        return /\s+end$/.test(line + input) || /\s+}$/.test(line + input) || /\s+else$/.test(line + input);
     };
 
     this.autoOutdent = function(state, doc, row) {
-        this.$outdent.autoOutdent(doc, row);
+        var indent = this.$getIndent(doc.getLine(row));
+        var tab = doc.getTabString();
+        if (indent.slice(-tab.length) == tab)
+            doc.remove(new Range(row, indent.length-tab.length, row, indent.length));
     };
 
 }).call(Mode.prototype);
diff --git a/lib/ace/mode/ruby_test.js b/lib/ace/mode/ruby_test.js
new file mode 100644
index 00000000..25548f02
--- /dev/null
+++ b/lib/ace/mode/ruby_test.js
@@ -0,0 +1,78 @@
+/* ***** BEGIN LICENSE BLOCK *****
+ * Distributed under the BSD license:
+ *
+ * Copyright (c) 2010, Ajax.org B.V.
+ * All rights reserved.
+ *
+ * Redistribution and use in source and binary forms, with or without
+ * modification, are permitted provided that the following conditions are met:
+ *     * Redistributions of source code must retain the above copyright
+ *       notice, this list of conditions and the following disclaimer.
+ *     * Redistributions in binary form must reproduce the above copyright
+ *       notice, this list of conditions and the following disclaimer in the
+ *       documentation and/or other materials provided with the distribution.
+ *     * Neither the name of Ajax.org B.V. nor the
+ *       names of its contributors may be used to endorse or promote products
+ *       derived from this software without specific prior written permission.
+ *
+ * THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND
+ * ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
+ * WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
+ * DISCLAIMED. IN NO EVENT SHALL AJAX.ORG B.V. BE LIABLE FOR ANY
+ * DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES
+ * (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES;
+ * LOSS OF USE, DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND
+ * ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT
+ * (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT OF THE USE OF THIS
+ * SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
+ *
+ * ***** END LICENSE BLOCK ***** */
+
+if (typeof process !== "undefined") {
+    require("amd-loader");
+}
+
+define(function(require, exports, module) {
+"use strict";
+
+var EditSession = require("../edit_session").EditSession;
+var Tokenizer = require("../tokenizer").Tokenizer;
+var Mode = require("./ruby").Mode;
+var assert = require("../test/assertions");
+
+module.exports = {
+    setUp : function() {
+        this.mode = new Mode();
+    },
+
+    "test getNextLineIndent": function() {
+        assert.equal(this.mode.getNextLineIndent("start", "class Foo", "  "), "  ");
+        assert.equal(this.mode.getNextLineIndent("start", "  def thing(wut)", "  "), "    ");
+        assert.equal(this.mode.getNextLineIndent("start", "  fork do", "  "), "    ");
+        assert.equal(this.mode.getNextLineIndent("start", "  fork do |wut| ", "  "), "    ");
+        assert.equal(this.mode.getNextLineIndent("start", "  something = :ruby", "  "), "  ");
+        assert.equal(this.mode.getNextLineIndent("start", "  if something == 3", "  "), "    ");
+        assert.equal(this.mode.getNextLineIndent("start", "  else", "  "), "    ");
+    },
+
+    "test: checkOutdent": function() {
+        assert.ok(this.mode.checkOutdent("start", "        en", "d"));
+        assert.ok(this.mode.checkOutdent("start", "        els", "e"));
+        assert.ok(this.mode.checkOutdent("start", "        ", "}"));
+        assert.equal(this.mode.checkOutdent("start", "  end", "\n"), false);
+        assert.equal(this.mode.checkOutdent("start", "foo = ba", "r"), false);
+    },
+
+    "test: auto outdent" : function() {
+        var session = new EditSession(["class Phil", "  Foo = 'bar'", "  end"]);
+        this.mode.autoOutdent("start", session, 2);
+        assert.equal("  end", session.getLine(2));
+    }
+
+};
+
+});
+
+if (typeof module !== "undefined" && module === require.main) {
+    require("asyncjs").test.testcase(module.exports).exec()
+}