diff --git a/lib/bundler.rb b/lib/bundler.rb
index f4373662ba5..b00887392ab 100644
--- a/lib/bundler.rb
+++ b/lib/bundler.rb
@@ -120,6 +120,17 @@ def message
     status_code(23)
   end
 
+  class YAMLSyntaxError < BundlerError
+    attr_reader :orig_exception
+
+    def initialize(orig_exception, msg)
+      super(msg)
+      @orig_exception = orig_exception
+    end
+
+    status_code(25)
+  end
+
   class << self
     attr_writer :bundle_path
 
diff --git a/lib/bundler/friendly_errors.rb b/lib/bundler/friendly_errors.rb
index e60f73f7dfe..f6f8fd5623e 100644
--- a/lib/bundler/friendly_errors.rb
+++ b/lib/bundler/friendly_errors.rb
@@ -5,6 +5,10 @@
 module Bundler
   def self.with_friendly_errors
     yield
+  rescue YAMLSyntaxError => e
+    Bundler.ui.error e.message
+    Bundler.ui.trace e.orig_exception
+    exit e.status_code
   rescue Bundler::Dsl::DSLError => e
     Bundler.ui.error e.message
     exit e.status_code
diff --git a/lib/bundler/rubygems_integration.rb b/lib/bundler/rubygems_integration.rb
index f4c2a12d9d1..ed7d061b9cc 100644
--- a/lib/bundler/rubygems_integration.rb
+++ b/lib/bundler/rubygems_integration.rb
@@ -67,6 +67,9 @@ def configuration
       Bundler.ui.error "#{e.class}: #{e.message}"
       Bundler.ui.trace e
       raise
+    rescue Psych::SyntaxError => e
+      raise YAMLSyntaxError.new(e, "Your RubyGems configuration, which is " \
+        "usually located in ~/.gemrc, contains invalid YAML syntax.")
     end
 
     def ruby_engine
diff --git a/spec/bundler/friendly_errors_spec.rb b/spec/bundler/friendly_errors_spec.rb
index ee0667cb2f5..8e83dc3059c 100644
--- a/spec/bundler/friendly_errors_spec.rb
+++ b/spec/bundler/friendly_errors_spec.rb
@@ -3,6 +3,33 @@
 require "bundler/friendly_errors"
 
 describe Bundler, "friendly errors" do
+  context "with invalid YAML in .gemrc" do
+    before do
+      File.open(Gem.configuration.config_file_name, "w") do |f|
+        f.write "invalid: yaml: hah"
+      end
+    end
+
+    after do
+      FileUtils.rm(Gem.configuration.config_file_name)
+    end
+
+    it "reports a relevant friendly error message" do
+      gemfile <<-G
+        source "file://#{gem_repo1}"
+        gem "rack"
+      G
+
+      bundle :install, :env => { "DEBUG" => true }
+
+      expect(out).to include("Your RubyGems configuration")
+      expect(out).to include("invalid YAML syntax")
+      expect(out).to include("Psych::SyntaxError")
+      expect(out).not_to include("ERROR REPORT TEMPLATE")
+      expect(exitstatus).to eq(25) if exitstatus
+    end
+  end
+
   it "rescues Thor::AmbiguousTaskError and raises SystemExit" do
     expect {
       Bundler.with_friendly_errors do