ABSTRACT A number of Local Group dwarf galaxies are known to have two spatially segregated stellar metallicity populations, a centrally concentrated metal-rich population, and a more extended metal-poor population. In this work we discuss mechanisms that lead to the formation of two spatially segregated metallicity populations. Using a set of high-resolution hydrodynamical simulations of Local Group-like environments, we select a sample of satellite and field galaxies, spanning the stellar mass range 106–109 M⊙, that exhibit bimodality in their metallicity distributions. Among those, we identify a subsample with a strong spatial segregation in the two populations. We find three distinct mechanisms for their formation. In field dwarfs and in a small fraction of satellites, a merger causes the metal-poor stars to migrate to larger radii and encourages the available gas to sink to the centre of the dwarf. Most of the gas is subsequently blown out of the halo through star formation feedback, but the remaining gas is consumed in the formation of a metal-rich population. In the exclusive case of satellites that have retained some of their gas at infall, it is the compression of this gas by ram pressure near pericentre that triggers the formation of metal-rich stars, whilst simultaneously preventing star formation at larger radii through stripping. Additionally, in a small number of field and satellite dwarfs, interactions with gaseous filaments and other galaxies can result in the formation of a metal-rich population. Regardless of the formation mechanism, a history of mergers typically enhances the spatial segregation.