The 25,000-ton ship is the oldest in the Saga Cruises fleet, recently being joined by the newer Saga Sapphire.
It was also confirmed the line will add the Quest for Adventure back to the Saga brand as the Saga Pearl II.
The 25,000-ton, 655-passenger ship will celebrate its 40th (ruby) anniversary with one final round the world cruise at the start of 2013.
Meanwhile, the line has announced Quest for Adventure will revert back to its former name of Saga Pearl II once its published cruise calendar is complete in 18 months. It will also no longer offer adventure itineraries.
The move means that Saga will be back to a two-ship fleet in 2014, and the line has hinted at plans for a new-build ship, most recently at the European Cruise Council meeting in Brussels.
A U.K. spokesman has confirmed that Saga would like to expand the fleet, but he denied any order had been placed for a new-build.
Robin Shaw, Chief Executive of Saga Shipping said: "Saga Ruby has delighted cruise-goers for some 40 years, but operating a ship of this age to meet the exacting standards we and others set is becoming an increasing challenge. We have therefore decided that she should be gracefully retired in 18 months. Saga Ruby will in her ruby anniversary year visit many of the ports where she been warmly welcomed over the years.
"We believe that Saga cruising has a great deal of potential and we have invested over the last few year well over £100 million on our fleet and we continue to look for opportunities to expand and improve our classic cruise experience."
Saga Ruby was built in 1973 at Jarrow Shipyard on Tyneside, and has sailed under two previous incarnations: Vistafjord and Caronia, when it became part of Cunard's fleet. Saga bought the vessel in 2004 and spent £17 million refurbishing it.
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