Bistability, differential gain, discriminator, clipper, and limier actions were observed using a plano‐concave Fabry‐Perot cavity containing ruby. Input powers were approximately 20 mW from a cw ruby laser. Operation wa anticipated near 77 °K where the R1 transition was nearly resonant with the laser. However, the device functioned at room temperature. The refractive index of ruby depends on the fractional ground‐state population. Driving the R lines leads to a nonlinear refractive index due to dispersive contributions from nonresonant pump and charge‐transfer bands, which explains the room‐temperature operation.