Seeing a 2-year-old terrified by images he can't turn off or chase away is almost as scary for moms and dads as for their little ones. This is a time to throw out the strict sleep-training regimen and just love your child; experts ranging from the American Academy of Pediatrics to the Mayo Clinic all give permission to provide as much comfort as necessary after a nasty nightmare. It's likely to take lots of cuddles, calming words and creativity to get everybody back to peaceful dreamland.
Hold your 2-year-old until he stops crying. Soothe him in whatever way works best -- rocking, lullabies, nursing, back rubs, shushing, or anything else that's calmed him down when he's been hurt or frightened in the past. Stay calm yourself as you interact with him. If you seem nervous or frightened by his tears, he'll pick up on your anxiety and get more upset.
Ask your child to tell you about the nightmare if she still seems upset and has the language skills to communicate well. She may not be willing or able to talk about it, which is fine, but knowing what caused the anxiety can help you settle her faster. For instance, if she dreamed that something terrible happened to Daddy, two minutes with him will do more to calm her down than an hour of Mommy hugs.
Reassure your child that he's safe and you're here to take care of him. Phrases like "It was just a dream" may not mean much to 2-year-olds, since they have trouble distinguishing between fantasy and reality. Instead, just keep reminding him that he's safe in bed and that his dream can't hurt him. If he's told you anything about the nightmare, you can reassure him by showing him that it wasn't real: "I just checked under your bed, and there isn't a single monster down there" or "The vacuum cleaner is still locked away in the closet, so it won't come near you."
Give your child anything she needs, within reason, to feel safe and calm. She'll almost certainly need to cuddle with a favorite stuffed animal, blanket or other security object to feel safe after you make your exit. Leave a favorite doll to "stand guard" and protect your 2-year-old from monsters and bad dreams. You may also need to turn on a night-light before you go. Avoid doing anything that involves getting her out of bed, though; that will just make her more awake and less likely to fall back to sleep.
Leave the room only when your child is calm and relaxed again. Keep the bedroom door open so your 2-year-old feels less isolated and more secure in the knowledge that rescue is just a few steps away.