diff --git a/.gitignore b/.gitignore
index 7a0bbfc..52be45d 100644
--- a/.gitignore
+++ b/.gitignore
@@ -1,3 +1,6 @@
+# Emacs backup files
+*~
+
 # Bazel Ignores
 **/bazel-*
 .bazelrc.user
diff --git a/ruby/private/gem.bzl b/ruby/private/gem.bzl
index d94bb50..9d43288 100644
--- a/ruby/private/gem.bzl
+++ b/ruby/private/gem.bzl
@@ -11,12 +11,14 @@ def rb_gem(name, version, gem_name, srcs = [], **kwargs):
     _gemspec_name = name + "_gemspec"
     deps = kwargs.get("deps", [])
     source_date_epoch = kwargs.pop("source_date_epoch", None)
+    strip_package = kwargs.pop("strip_package", "")
     verbose = kwargs.pop("verbose", False)
 
     _rb_gemspec(
         name = _gemspec_name,
         gem_name = gem_name,
         version = version,
+        strip_package = strip_package,
         **kwargs
     )
 
@@ -28,5 +30,6 @@ def rb_gem(name, version, gem_name, srcs = [], **kwargs):
         deps = srcs + deps,
         visibility = ["//visibility:public"],
         source_date_epoch = source_date_epoch,
+        strip_package = strip_package,
         verbose = verbose,
     )
diff --git a/ruby/private/gem/dest_path.bzl b/ruby/private/gem/dest_path.bzl
new file mode 100644
index 0000000..351f11b
--- /dev/null
+++ b/ruby/private/gem/dest_path.bzl
@@ -0,0 +1,5 @@
+def dest_path(f, pkg):
+    result = f.short_path
+    if pkg and result.startswith(pkg):
+        result = result[1+len(pkg):]
+    return result
diff --git a/ruby/private/gem/gem.bzl b/ruby/private/gem/gem.bzl
index 2bf48d3..8701833 100644
--- a/ruby/private/gem/gem.bzl
+++ b/ruby/private/gem/gem.bzl
@@ -1,4 +1,5 @@
 load("//ruby/private:providers.bzl", "RubyGem")
+load("//ruby/private/gem:dest_path.bzl", _dest_path = "dest_path")
 
 # Runs gem with arbitrary arguments
 # eg: run_gem(runtime_ctx, ["install" "foo"])
@@ -8,15 +9,21 @@ def _rb_build_gem_impl(ctx):
 
     _inputs = [ctx.file._gem_runner, metadata_file, gemspec]
     _srcs = []
+
+    strip_package = ctx.attr.strip_package
+
     for dep in ctx.attr.deps:
         file_deps = dep.files.to_list()
         _inputs.extend(file_deps)
         for f in file_deps:
+            dest_path = _dest_path(f, strip_package)
             _srcs.append({
                 "src_path": f.path,
-                "dest_path": f.short_path,
+                "dest_path": dest_path,
             })
 
+    do_strip = (strip_package != "")
+
     ctx.actions.write(
         output = metadata_file,
         content = struct(
@@ -25,6 +32,7 @@ def _rb_build_gem_impl(ctx):
             output_path = ctx.outputs.gem.path,
             source_date_epoch = ctx.attr.source_date_epoch,
             verbose = ctx.attr.verbose,
+            do_strip = do_strip,
         ).to_json(),
     )
 
@@ -56,7 +64,7 @@ _ATTRS = {
         cfg = "host",
     ),
     "_gem_runner": attr.label(
-        default = Label("@coinbase_rules_ruby//ruby/private/gem:gem_runner.rb"),
+        default = ":gem_runner.rb",
         allow_single_file = True,
     ),
     "gemspec": attr.label(
@@ -71,6 +79,10 @@ _ATTRS = {
     "source_date_epoch": attr.string(
         doc = "Sets source_date_epoch env var which should make output gems hermetic",
     ),
+    "strip_package": attr.string(
+            default = "",
+            doc = "strip this dir prefix from file paths added to the gem, such as package_name()",
+    ),
     "verbose": attr.bool(default = False),
 }
 
diff --git a/ruby/private/gem/gem_runner.rb b/ruby/private/gem/gem_runner.rb
index 80cf892..a958ea9 100644
--- a/ruby/private/gem/gem_runner.rb
+++ b/ruby/private/gem/gem_runner.rb
@@ -31,12 +31,24 @@ def parse_opts
   metadata_file
 end
 
-def copy_srcs(dir, srcs, verbose)
+def copy_srcs(dir, srcs, verbose, do_strip)
   # Sources need to be moved from their bazel_out locations
   # to the correct folder in the ruby gem.
   srcs.each do |src|
     src_path = src['src_path']
     dest_path = src['dest_path']
+
+    if do_strip and File.directory?(src_path)
+      # Lop off the leading path element.
+      # If that was the only path element,
+      # copy the source dir's contents to the dest,
+      # rather than the source itself.
+      dest_path = dest_path.split('/', 2)[1..].join('/')
+      if dest_path == ''
+        src_path += '/.'
+      end
+    end
+
     tmpname = File.join(dir, File.dirname(dest_path))
     FileUtils.mkdir_p(tmpname)
     puts "copying #{src_path} to #{tmpname}" if verbose
@@ -80,8 +92,9 @@ def build_gem(metadata)
   # We copy all related files to a tmpdir, build the entire gem in that tmpdir
   # and then copy the output gem into the correct bazel output location.
   verbose = metadata['verbose']
+  do_strip = metadata['do_strip']
   Dir.mktmpdir do |dir|
-    copy_srcs(dir, metadata['srcs'], verbose)
+    copy_srcs(dir, metadata['srcs'], verbose, do_strip)
     copy_gemspec(dir, metadata['gemspec_path'])
     do_build(dir, metadata['gemspec_path'], metadata['output_path'])
   end
diff --git a/ruby/private/gem/gemspec.bzl b/ruby/private/gem/gemspec.bzl
index 97ff558..64018e2 100644
--- a/ruby/private/gem/gemspec.bzl
+++ b/ruby/private/gem/gemspec.bzl
@@ -7,6 +7,7 @@ load(
     "RubyGem",
     "RubyLibrary",
 )
+load("//ruby/private/gem:dest_path.bzl", _dest_path = "dest_path")
 
 def _get_transitive_srcs(srcs, deps):
     return depset(
@@ -14,19 +15,23 @@ def _get_transitive_srcs(srcs, deps):
         transitive = [dep[RubyLibrary].transitive_ruby_srcs for dep in deps],
     )
 
-def _rb_gem_impl(ctx):
+def _rb_gemspec_impl(ctx):
     gemspec = ctx.actions.declare_file("{}.gemspec".format(ctx.attr.gem_name))
     metadata_file = ctx.actions.declare_file("{}_metadata".format(ctx.attr.gem_name))
 
     _ruby_files = []
     file_deps = _get_transitive_srcs([], ctx.attr.deps).to_list()
+
+    strip_package = ctx.attr.strip_package
+
     for f in file_deps:
         # For some files the src_path and dest_path will be the same, but
-        # for othrs the src_path will be in bazel)out while the dest_path
+        # for others the src_path will be in bazel-out while the dest_path
         # will be from the workspace root.
+        dest_path = _dest_path(f, strip_package)
         _ruby_files.append({
             "src_path": f.path,
-            "dest_path": f.short_path,
+            "dest_path": dest_path,
         })
 
     ctx.actions.write(
@@ -39,6 +44,7 @@ def _rb_gem_impl(ctx):
             licenses = ctx.attr.licenses,
             require_paths = ctx.attr.require_paths,
             gem_runtime_dependencies = ctx.attr.gem_runtime_dependencies,
+            do_strip = (strip_package != ""),
         ).to_json(),
     )
 
@@ -101,7 +107,7 @@ _ATTRS = {
     "require_paths": attr.string_list(),
     "_gemspec_template": attr.label(
         allow_single_file = True,
-        default = "gemspec_template.tpl",
+        default = ":gemspec_template.tpl",
     ),
     "ruby_sdk": attr.string(
         default = "@org_ruby_lang_ruby_toolchain",
@@ -113,13 +119,17 @@ _ATTRS = {
         cfg = "host",
     ),
     "_gemspec_builder": attr.label(
-        default = Label("@coinbase_rules_ruby//ruby/private/gem:gemspec_builder.rb"),
+        default = ":gemspec_builder.rb",
         allow_single_file = True,
     ),
+    "strip_package": attr.string(
+            default = "",
+            doc = "strip this dir prefix from file paths added to the gem, such as package_name()",
+    ),
 }
 
 rb_gemspec = rule(
-    implementation = _rb_gem_impl,
+    implementation = _rb_gemspec_impl,
     attrs = _ATTRS,
     provides = [DefaultInfo, RubyGem],
 )
diff --git a/ruby/private/gem/gemspec_builder.rb b/ruby/private/gem/gemspec_builder.rb
index 20e1e50..ede7c29 100644
--- a/ruby/private/gem/gemspec_builder.rb
+++ b/ruby/private/gem/gemspec_builder.rb
@@ -63,20 +63,32 @@ def expand_src_dirs(metadata)
   # Files and required paths can include a directory which gemspec
   # cannot handle. This will convert directories to individual files
   srcs = metadata['raw_srcs']
+  do_strip = metadata['do_strip']
+
   new_srcs = []
+  dests = []
   srcs.each do |src|
     src_path = src['src_path']
     dest_path = src['dest_path']
     if File.directory?(src_path)
       Dir.glob("#{src_path}/**/*") do |f|
         # expand the directory, replacing each src path with its dest path
-        new_srcs << f.gsub(src_path, dest_path) if File.file?(f)
+        if File.file?(f)
+          g = f.gsub(src_path, dest_path)
+          new_srcs << g
+          if do_strip
+            dests << g.sub(/^[^\/]+\//, '')
+          else
+            dests << g
+          end
+        end
       end
     elsif File.file?(src_path)
       new_srcs << dest_path
     end
   end
   metadata['srcs'] = new_srcs
+  metadata['dests'] = dests
   metadata
 end
 
diff --git a/ruby/private/gem/gemspec_template.tpl b/ruby/private/gem/gemspec_template.tpl
index 2a101c5..40fab57 100644
--- a/ruby/private/gem/gemspec_template.tpl
+++ b/ruby/private/gem/gemspec_template.tpl
@@ -4,7 +4,7 @@ Gem::Specification.new do |s|
   s.authors                  = {authors}
   s.version                  = "{version}"
   s.licenses                 = {licenses}
-  s.files                    = {srcs}
+  s.files                    = {dests}
   s.require_paths            = {require_paths}
 
   {gem_runtime_dependencies}