The common gem install mysql does not work in MacOS X with pre-installed ruby. Run the following commands to install the mysql gem in Mac OS X.
sudo env ARCHFLAGS="-arch i386" gem install mysql -- --with-mysql-dir=/usr/local/mysql --with-mysql-lib=/usr/local/mysql/lib --with-mysql-include=/usr/local/mysql/include
sudo install_name_tool -change /usr/local/mysql/lib/mysql/libmysqlclient.15.dylib /usr/local/mysql/lib/libmysqlclient.15.dylib /Library/Ruby/Gems/1.8/gems/mysql-2.7/lib/mysql.bundle