The sudden step back might have a physical cause (tooth breaking through, coming down with a fever, stomach cramps from a change of diet, whatever), in which case the problem will be short-lived and go away once the physical cause disappears.
If not, read on.
Yes: Do whatever works. Don't fall for all the parenting advice that tells you that your child needs sleep training, needs to sleep alone, needs to cry it out, needs to fall asleep feeling your body pressed against his etc. In our case, what "worked" was:
We bought a babybay crib that attaches to your bed and lets the baby sleep right next to his parents.
When he didn't go to sleep, I carried him around for hours at a time in the middle of the night.
We took turns - when he woke up, I took care of him from 8 pm to 2 or 3 am and my wife took over at that time, so we both got some sleep. We did that for months.
This was the best solution we could come up with that allowed us at least some sleep and gave us a clear conscience, even though I would have preferred the baby sleeping in his own room. But that just didn't work.
We tried letting him cry in his own room, but as you describe, this soon turned into full-fledged, terrorized screaming which was so heart-wrenching that we stopped that experiment almost before we had begun it.
We tried for so long to get him to sleep on his own that it became a real strain on our family, and this is when we decided to stop trying to force something that only created conflict and bad feelings all around and went with the three points I mentioned.
Once he started sleeping through the night in our bedroom, points 2 and 3 became unnecessary. We finally happened on the solution to get rid of point 1 when we put him in the same room with his younger siblings. He shares a room with one of his younger brothers to this day. We've offered a room to himself, but up to now, he's not interested. We now think he just needs company to feel safe at night, and we see no reason to fight that, since it's not causing any problems whatsoever.
In hindsight, we could slap ourselves for not having thought of putting him with his siblings as soon as possible. We've become a lot more relaxed about "parenting rules". I have also become sceptical in regards to parenting advice that tells you it's important to teach your child something now because it will harm him down the line if you don't. In my experience, children simply don't work like that.
As the "cry it out"-method was discussed: I don't know if the "Every child can sleep" / "let him cry it out" method really works. I don't know whether, like David Hedlund says, it has hidden costs or whether it's teaching babies to self-soothe. But frankly I don't care, because it wasn't an option for us. We simply couldn't even contemplate listening to our child screaming his lungs out until he was blue in the face and near fainting from oxygen deprivation.
So if your child takes a step back and something that used to work no longer works, don't adhere to a fixed program. Kids aren't computers. Be flexible. Try different things, and once you happen on something new that works which you can live with for now, go with it. Your child is growing fast, so whatever the solution looks like now, you won't have to live with it forever.