diff --git a/lib/rubygems/spec_fetcher.rb b/lib/rubygems/spec_fetcher.rb
index 7e5c1faa2ecf..ffb4a2be918e 100644
--- a/lib/rubygems/spec_fetcher.rb
+++ b/lib/rubygems/spec_fetcher.rb
@@ -148,20 +148,18 @@ def spec_for_dependency(dependency, matching_platform=true)
   end
 
   ##
-  # Suggests a gem based on the supplied +gem_name+. Returns a string
-  # of the gem name if an approximate match can be found or nil
-  # otherwise. NOTE: for performance reasons only gems which exactly
-  # match the first character of +gem_name+ are considered.
+  # Suggests gems based on the supplied +gem_name+. Returns an array of
+  # alternative gem names.
 
   def suggest_gems_from_name gem_name
-    gem_name        = gem_name.downcase
+    gem_name        = gem_name.downcase.tr('_-', '')
     max             = gem_name.size / 2
     names           = available_specs(:complete).first.values.flatten(1)
 
     matches = names.map { |n|
       next unless n.match_platform?
 
-      distance = levenshtein_distance gem_name, n.name.downcase
+      distance = levenshtein_distance gem_name, n.name.downcase.tr('_-', '')
 
       next if distance >= max
 
diff --git a/test/rubygems/test_gem_commands_install_command.rb b/test/rubygems/test_gem_commands_install_command.rb
index bf8bb92694d1..e6a9a9ce501f 100644
--- a/test/rubygems/test_gem_commands_install_command.rb
+++ b/test/rubygems/test_gem_commands_install_command.rb
@@ -205,6 +205,30 @@ def test_execute_nonexistent_with_hint
     assert_equal expected, @ui.error
   end
 
+  def test_execute_nonexistent_with_dashes
+    misspelled = "non-existent_with-hint"
+    correctly_spelled = "nonexistent-with_hint"
+
+    util_setup_fake_fetcher
+    util_setup_spec_fetcher quick_spec(correctly_spelled, '2')
+
+    @cmd.options[:args] = [misspelled]
+
+    use_ui @ui do
+      e = assert_raises Gem::SystemExitException do
+        @cmd.execute
+      end
+
+      assert_equal 2, e.exit_code
+    end
+
+    expected = ["ERROR:  Could not find a valid gem 'non-existent_with-hint' (>= 0) in any repository", "ERROR:  Possible alternatives: nonexistent-with_hint"]
+
+    output = @ui.error.split "\n"
+
+    assert_equal expected, output
+  end
+
   def test_execute_conflicting_install_options
     @cmd.options[:user_install] = true
     @cmd.options[:install_dir] = "whatever"