Generation, storage, and utilization of correlated many-body quantum states are crucial objectives of future quantum technologies and metrology. Such states can be generated by the spin-squeezing protocols, i.e., one-axis twisting and two-axis countertwisting. In this Letter, we show activation of these two squeezing mechanisms in a system composed of ultracold atomic fermions in the Mott insulating phase by a position-dependent laser coupling of atomic internal states. Realization of both the squeezing protocols is feasible in the current state-of-the-art experiments.