Could not find rake-10.1.0 in any of the sources (Bundler::GemNotFound) This is a very common issue sometimes and it took me time to figure it out. The passenger configuration present in /etc/apache2/apache2.conf was pointing to different ruby version. Change it accordingly depending on the specific ruby version being used. Steps i performed: $ rvm use 1.9.3p327 $rvm gemset list $rvm gemset create g1 $cd . Now edit the .rvmrc files present in project folder accordingly, rvm use 1.9.3-p327@g1 From the project folder type $cd . and the ruby version with specific gemset is loaded for the application. You can also do $ rvm use 1.9.3p327 --default to make it default. Once more way i fixed this issue is, removed the gemset which i created and used the default gemset that is available. $ rvm gemset use default