Fábio Silva opened the scoring shortly after half-time at Signal Iduna Park, before substitute Ruibal levelled for the visitors in the 67th minute. However, Karetsas restored Dortmund's advantage in the 72nd minute to condemn Manuel Pellegrini's side to their first defeat in the Champions League.
Pellegrini was disappointed not to take anything from the match, but felt his team had shown the personality required to compete against one of Germany's leading clubs.
"I'm disappointed that we haven't managed to get a point. We played a very good game, showing the personality to go out and win from the first minute."
He added: "The team competed, I am satisfied with what we did, but disappointed not to get a point. Nine points from 12 is a good return in the Champions League."
The Real Betis coach believed a draw would have been a fair reflection of the contest.
"Coming to a stadium like this and trying to win from the beginning, not just in any way but by imposing our football, shows maturity and personality. The draw would have been the fair result."
Dortmund had taken the lead through Silva, who finished after Betis goalkeeper Álvaro Valles had saved Jobe Bellingham's initial effort. Ruibal then came off the bench and made an immediate impact, finishing Abde Ezzalzouli's cross after Betis won possession in the opposition half.
But Dortmund responded quickly. Silva turned provider, setting up Karetsas to fire home the winning goal four minutes after the equaliser.
Dortmund coach Niko Kovač was pleased with his side's response, particularly after losing Serhou Guirassy to an early injury.
"I'm very pleased with my team. We dictated the game for long periods and kept it under control. It wasn't easy, partly because we lost Serhou [Guirassy] to injury early on."
Kovač also praised the contribution of Karetsas, who had come on as a first-half substitute.
"But I'm delighted that Konstantinos [Karetsas] came on, did his job very well and scored too. It's good to get such a positive boost from the bench."
Pellegrini, meanwhile, was pleased with the contribution of Ruibal, who had endured a difficult spell recovering from injury.
"Aitor has always shown that commitment and personality, whatever position he has played. He scored, could have got a second, and I am happy for him because he had a difficult four or five months. The goal will do him good."
Despite the defeat, Pellegrini insisted Betis would continue to approach their remaining European fixtures with the same ambition.
"This team will go out to compete in the Champions League regardless of the opponent."
Betis remain on nine points from four matches, but missed the opportunity to strengthen their position among the league phase's leading teams.