Scientists have created the device, which lasts for up to three months, to deliver contraceptive medication and drugs that protect against HIV and herpes.
Developed by biomedical engineer Patrick Kiser from America's Northwestern University, the gadget has been billed as a "significant advance" in drug delivery technology.
The tool delivers controlled doses of the drugs tenofovir, a antiretroviral medication, and contraceptive levonorgestrel for 90 days.
Details of the device have been published in the online journal Public Library Of Science ONE.
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Mr Kiser and his team explain how they developed the tool so that it could deliver fixed doses of the drugs over a prolonged period.
"The differences between the two drugs are huge, which presented us with a design challenge," Mr Kiser said.
"Tenofovir is highly water soluble while levonorgestrel is highly water insoluble. And the daily dose is different: the ring delivers about 10 milligrams of tenofovir and only 10 micrograms of levonorgestrel. Our scientific hurdle was finding a way to manufacture a dual-purpose ring that got the device into the clinic."
Tenofovir inhibits HIV and HSV-2 (herpes simplex virus-2) replication in susceptible cells, the researchers said.
Antiretroviral drugs can prevent HIV infection, but existing methods for delivering the drug fall short, they said. Pills must be taken daily and require high doses.
But the new device, which is inserted into a woman's vagina, has been engineered with specific diffusion rates so the drugs in the ring are released into the body at the desired rate.
"I suspect women will use the ring primarily for contraception, but they also will benefit from protection against sexually transmitted diseases," Mr Kiser said.
"And for women in the developing world in particular, unwanted pregnancy can have significant health, economic and cultural consequences. We want to motivate women to use this ring.
"This system represents a significant advance in vaginal drug delivery technology and is the first in a new class of long-acting multi-purpose prevention drug delivery systems."
The device is currently being manufactured and is yet to be tested in women.
Meanwhile, researchers have claimed they have successfully genetically engineered the immune cells of HIV positive patients to resist infection.
The study, in the New England Journal of Medicine, suggests that in the future patients may be able to control the virus without antiretroviral drugs.
The researchers from the University of Pennsylvania gave gene therapy to 12 HIV positive patients who were participating in a clinical trial.
"This study shows that we can safely and effectively engineer an HIV patient's own T cells to mimic a naturally occurring resistance to the virus, infuse those engineered cells, have them persist in the body, and potentially keep viral loads at bay without the use of drugs," said senior author Carl June.
"This reinforces our belief that modified T cells are the key that could eliminate the need for lifelong ADT (antiretroviral drug therapy) and potentially lead to functionally curative approaches for HIV/AIDS."
Mr June and his colleagues modified the T cells in the patients to mimic the CCR5-delta-32 mutation - a rare mutation that provides a natural resistance to the virus.
By inducing the mutations the scientists successfully rendered the patients' cells resistant to infection. Six were taken off antiretroviral therapy for up to 12 weeks, beginning four weeks after infusion, while six patients remained on treatment.